exv4w1






Exhibit 4.1




 



MERCER INTERNATIONAL INC.




8.5% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2012

 






INDENTURE




Dated as of December 10, 2009




 






Wells Fargo Bank, National Association




Trustee




 






      





 









 








CROSS-REFERENCE TABLE*




	 	 	 	 	 
	Trust Indenture	 	Indenture	 
	Act Section	 	Section	 
	310(a)(1)
	 	 	9.10	 
	(a)(2)
	 	 	9.10	 
	(a)(3)
	 	 	n/a	 
	(a)(4)
	 	 	n/a	 
	(a)(5)
	 	 	9.10	 
	(b)
	 	 	9.10	 
	(c)
	 	 	n/a	 
	 
	 	 	 	 
	311(a)
	 	 	9.11	 
	(b)
	 	 	9.11	 
	(c)
	 	 	n/a	 
	 
	 	 	 	 
	312(a)
	 	 	2.05	 
	(b)
	 	 	12.03	 
	(c)
	 	 	12.03	 
	 
	 	 	 	 
	313(a)
	 	 	9.06	 
	(b)(1)
	 	 	n/a	 
	(b)(2)
	 	 	9.06, 9.07	 
	(c)
	 	 	9.06, 12.02	 
	(d)
	 	 	9.06	 
	 
	 	 	 	 
	314(a)
	 	 	6.03	 
	(a)(4)
	 	 	12.05	 
	(b)
	 	 	n/a	 
	(c)(1)
	 	 	n/a	 
	(c)(2)
	 	 	n/a	 
	(c)(3)
	 	 	n/a	 
	(d)
	 	 	n/a	 
	(e)
	 	 	12.05	 
	(f)
	 	 	n/a	 
	 
	 	 	 	 
	315(a)
	 	 	n/a	 
	(b)
	 	 	n/a	 
	(c)
	 	 	n/a	 
	(d)
	 	 	n/a	 
	(e)
	 	 	n/a	 
	 
	 	 	 	 
	316(a)(last sentence)
	 	 	n/a	 
	(a)(1)(A)
	 	 	n/a	 
	(a)(1)(B)
	 	 	n/a	 
	(a)(2)
	 	 	n/a	 
	(b)
	 	 	8.07	 






i









 






	 	 	 	 	 
	Trust Indenture	 	Indenture	 
	Act Section	 	Section	 
	(c)
	 	 	n/a	 
	 
	 	 	 	 
	317(a)(1)
	 	 	n/a	 
	(a)(2)
	 	 	n/a	 
	(b)
	 	 	n/a	 
	 
	 	 	 	 
	318(a)
	 	 	n/a	 
	(b)
	 	 	n/a	 
	(c)
	 	 	12.01	 








 




			
	“n/a” means not applicable.
	 
	*	 	This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture.




ii









 










TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	ARTICLE 1.
	 	 	 	 
	DEFINITIONS AND INCORPORATION
	 	 	 	 
	BY REFERENCE
	 	 	 	 
	 
	 	 	 	 
	Section 1.01. Definitions

	 	 	1	 
	Section 1.02. Other Definitions

	 	 	7	 
	Section 1.03. Incorporation by Reference of Trust Indenture Act

	 	 	8	 
	Section 1.04. Rules of Construction

	 	 	8	 
	 
	 	 	 	 
	ARTICLE 2.
	 	 	 	 
	THE NOTES
	 	 	 	 
	 
	 	 	 	 
	Section 2.01. Form and Dating

	 	 	9	 
	Section 2.02. Execution and Authentication

	 	 	10	 
	Section 2.03. Registrar, Paying Agent and Conversion Agent

	 	 	10	 
	Section 2.04. Paying Agent to Hold Money in Trust

	 	 	11	 
	Section 2.05. Holder Lists

	 	 	11	 
	Section 2.06. Transfer and Exchange

	 	 	11	 
	Section 2.07. Replacement Notes

	 	 	12	 
	Section 2.08. Outstanding Notes

	 	 	13	 
	Section 2.09. Treasury Notes

	 	 	13	 
	Section 2.10. Temporary Notes

	 	 	14	 
	Section 2.11. Cancellation

	 	 	14	 
	Section 2.12. Additional Transfer and Exchange Requirements

	 	 	14	 
	Section 2.13. CUSIP Numbers

	 	 	16	 
	 
	 	 	 	 
	ARTICLE 3.
	 	 	 	 
	REDEMPTION AND PREPAYMENT
	 	 	 	 
	 
	 	 	 	 
	Section 3.01. Notices to Trustee

	 	 	17	 
	Section 3.02. Selection of Notes to Be Redeemed

	 	 	17	 
	Section 3.03. Notice of Redemption

	 	 	17	 
	Section 3.04. Effect of Notice of Redemption

	 	 	18	 
	Section 3.05. Deposit of Redemption Price

	 	 	18	 
	Section 3.06. Notes Redeemed in Part

	 	 	19	 
	Section 3.07. Optional Redemption

	 	 	19	 
	Section 3.08. Mandatory Redemption; No Sinking Fund

	 	 	19	 
	 
	 	 	 	 
	ARTICLE 4.
	 	 	 	 
	CONVERSION
	 	 	 	 
	 
	 	 	 	 
	Section 4.01. Conversion Privilege

	 	 	19	 
	Section 4.02. Conversion Procedure

	 	 	20	 
	Section 4.03. Fractional Shares

	 	 	21	 
	Section 4.04. Taxes on Conversion

	 	 	21	 
	Section 4.05. Company to Provide Stock

	 	 	21	 






iii









 






	 	 	 	 	 
	 	 	Page
	Section 4.06. Adjustment of Conversion Price

	 	 	22	 
	Section 4.07. No Adjustment

	 	 	26	 
	Section 4.08. Other Adjustments

	 	 	26	 
	Section 4.09. Voluntary Adjustments

	 	 	26	 
	Section 4.10. Notice of Adjustment

	 	 	27	 
	Section 4.11. Notice of Certain Transactions

	 	 	27	 
	Section 4.12. Effect of Reclassifications, Consolidations,
Mergers or Sales on Conversion
Privilege

	 	 	27	 
	Section 4.13. Trustee’s Disclaimer

	 	 	28	 
	Section 4.14. Voluntary Reduction

	 	 	29	 
	 
	 	 	 	 
	ARTICLE 5.
	 	 	 	 
	SUBORDINATION
	 	 	 	 
	 
	 	 	 	 
	Section 5.01. Agreement to Subordinate

	 	 	29	 
	Section 5.02. Liquidation; Dissolution; Bankruptcy

	 	 	29	 
	Section 5.03. Default on Senior Indebtedness

	 	 	30	 
	Section 5.04. Acceleration of Notes

	 	 	31	 
	Section 5.05. When Distribution Must Be Paid Over

	 	 	31	 
	Section 5.06. Notice by Company

	 	 	31	 
	Section 5.07. Subrogation

	 	 	31	 
	Section 5.08. Relative Rights

	 	 	32	 
	Section 5.09. Subordination May Not Be Impaired by Company

	 	 	32	 
	Section 5.10. Distribution or Notice to Representative

	 	 	32	 
	Section 5.11. Rights of Trustee and Paying Agent

	 	 	32	 
	Section 5.12. Authorization to Effect Subordination

	 	 	33	 
	Section 5.13. Payments of Notes Permitted

	 	 	33	 
	Section 5.14. Trustee Not Fiduciary for Holders of Senior Indebtedness

	 	 	33	 
	 
	 	 	 	 
	ARTICLE 6.
	 	 	 	 
	COVENANTS
	 	 	 	 
	 
	 	 	 	 
	Section 6.01. Payment of Notes

	 	 	34	 
	Section 6.02. Maintenance of Office or Agency

	 	 	34	 
	Section 6.03. Reports

	 	 	35	 
	Section 6.04. Compliance Certificate

	 	 	35	 
	Section 6.05. Taxes

	 	 	35	 
	Section 6.06. Stay, Extension and Usury Laws

	 	 	36	 
	Section 6.07. Corporate Existence

	 	 	36	 
	Section 6.08. Offer to Repurchase Upon Change in Control

	 	 	36	 
	Section 6.09. Limitation on Incurrence of Senior Indebtedness

	 	 	40	 
	Section 6.10. Limitation on Liens

	 	 	41	 
	Section 6.11. Prohibition on Incurrence of Senior Subordinated Debt

	 	 	42	 
	 
	 	 	 	 
	ARTICLE 7.
	 	 	 	 
	SUCCESSORS
	 	 	 	 
	 
	 	 	 	 
	Section 7.01. Merger, Consolidation, or Sale of Assets

	 	 	42	 
	Section 7.02. Successor Corporation Substituted

	 	 	43	 






iv









 






	 	 	 	 	 
	 	 	Page
	ARTICLE 8.
	 	 	 	 
	DEFAULTS AND REMEDIES
	 	 	 	 
	 
	 	 	 	 
	Section 8.01. Events of Default

	 	 	43	 
	Section 8.02. Acceleration

	 	 	44	 
	Section 8.03. Other Remedies

	 	 	44	 
	Section 8.04. Waiver of Past Defaults

	 	 	45	 
	Section 8.05. Control by Majority

	 	 	45	 
	Section 8.06. Limitation on Suits

	 	 	45	 
	Section 8.07. Rights of Holders of Notes to Receive Payment

	 	 	46	 
	Section 8.08. Collection Suit by Trustee

	 	 	46	 
	Section 8.09. Trustee May File Proofs of Claim

	 	 	46	 
	Section 8.10. Priorities

	 	 	47	 
	Section 8.11. Undertaking for Costs

	 	 	47	 
	 
	 	 	 	 
	ARTICLE 9.
	 	 	 	 
	TRUSTEE
	 	 	 	 
	 
	 	 	 	 
	Section 9.01. Duties of Trustee

	 	 	47	 
	Section 9.02. Rights of Trustee

	 	 	48	 
	Section 9.03. Individual Rights of Trustee

	 	 	50	 
	Section 9.04. Trustee’s Disclaimer

	 	 	50	 
	Section 9.05. Notice of Defaults

	 	 	50	 
	Section 9.06. Reports by Trustee to Holders of the Notes

	 	 	50	 
	Section 9.07. Compensation and Indemnity

	 	 	51	 
	Section 9.08. Replacement of Trustee

	 	 	52	 
	Section 9.09. Successor Trustee by Merger, etc.

	 	 	53	 
	Section 9.10. Eligibility; Disqualification

	 	 	53	 
	Section 9.11. Preferential Collection of Claims Against Company

	 	 	53	 
	 
	 	 	 	 
	ARTICLE 10.
	 	 	 	 
	SATISFACTION AND DISCHARGE
	 	 	 	 
	 
	 	 	 	 
	Section 10.01. Satisfaction and Discharge

	 	 	53	 
	Section 10.02. Application of Trust Money; Reinstatement

	 	 	54	 
	Section 10.03. Repayment to Company

	 	 	55	 
	 
	 	 	 	 
	ARTICLE 11.
	 	 	 	 
	AMENDMENT, SUPPLEMENT AND WAIVER
	 	 	 	 
	 
	 	 	 	 
	Section 11.01. Without Consent of Holders of Notes

	 	 	55	 
	Section 11.02. With Consent of Holders of Notes

	 	 	56	 
	Section 11.03. Compliance with Trust Indenture Act

	 	 	57	 
	Section 11.04. Revocation and Effect of Consents

	 	 	57	 
	Section 11.05. Notation on or Exchange of Notes

	 	 	58	 
	Section 11.06. Trustee to Sign Amendments, etc.

	 	 	58	 
	 
	 	 	 	 
	ARTICLE 12.
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Section 12.01. Trust Indenture Act Controls

	 	 	58	 
	Section 12.02. Notices

	 	 	58	 






v









 






	 	 	 	 	 
	 	 	Page
	Section 12.03. Communication by Holders of Notes with Other Holders of Notes

	 	 	59	 
	Section 12.04. Certificate and Opinion as to Conditions Precedent

	 	 	60	 
	Section 12.05. Statements Required in Certificate or Opinion

	 	 	60	 
	Section 12.06. Rules by Trustee and Agents

	 	 	60	 
	Section 12.07. No Personal Liability of Directors, Officers, Employees and Shareholders

	 	 	60	 
	Section 12.08. Governing Law

	 	 	61	 
	Section 12.09. No Adverse Interpretation of Other Agreements

	 	 	61	 
	Section 12.10. Successors

	 	 	61	 
	Section 12.11. Severability

	 	 	61	 
	Section 12.12. Counterparts

	 	 	61	 
	Section 12.13. Force Majeure

	 	 	61	 
	Section 12.14. U.S.A. Patriot Act

	 	 	62	 
	Section 12.15. Table of Contents, Headings, etc.

	 	 	62	 
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Exhibit A FORM OF NOTE
	 	 	 	 






vi









 





     INDENTURE dated as of December 10, 2009, between Mercer International Inc., a Washington corporation
(the “Company”), and Wells Fargo Bank, National Association, a national banking association
organized and existing under the laws of the United States, as trustee (the “Trustee”).



     WHEREAS, the Company has duly authorized the creation of a series of 8.5% Convertible Senior
Subordinated Notes due 2012 (the “Notes”).



     AND WHEREAS, the Company and certain holder(s) (the “Current Holders”) of the
Company’s 8.5% Convertible Senior Subordinated Notes due 2010 (the “Old Notes”) have agreed
or may subsequently agree to exchange their Old Notes for New Notes pursuant to exchange agreements
and/or other arrangements entered into or that may subsequently be entered into between the Company
and the Current Holders or otherwise (the “Exchange”).



     AND WHEREAS, the Exchange is exempt from the registration requirements of the Securities Act
of 1933, as amended, pursuant to Section 3(a)(9) thereof.



     NOW THEREFORE, the Company and the Trustee agree as follows for the benefit of each other and
for the equal and ratable benefit of the Holders of the Notes:



ARTICLE 1.

DEFINITIONS AND INCORPORATION

BY REFERENCE




Section 1.01. Definitions.




     “Affiliate” of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified Person.
For purposes of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise. The terms “controlling” and “controlled” have meanings
correlative to the foregoing.



     “Agent” means any Registrar, Paying Agent or Conversion Agent.



     “Applicable Procedures” means, with respect to any transfer or exchange of or for
beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and
Clearstream that apply to such transfer or exchange.



     “Bankruptcy Law” means Title 11, U.S. Code, the Bankruptcy and Insolvency Act
(Canada), the Companies’ Creditors Arrangement Act (Canada) or any similar U.S. or Canadian
federal, state or provincial law for the relief of debtors.



     “Board of Directors” means the Board of Directors of the Company, or any duly
authorized committee of such board.



     “Business Day” means any day other than a Legal Holiday.



1









 





     “Capital Stock” means any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock), including, without limitation, with respect
to partnerships, partnership interests (whether general or limited) , and including, with respect
to business trusts, shares of beneficial interest therein, and any other interest or participation
that confers on a Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership or trust.



     “Clearstream” means Clearstream Banking, SA.



     “Closing Sale Price” for any date means the last reported sale price or, in case no
such reported sale takes place on such date, the average of the reported closing bid and asked
prices in either case on NASDAQ or, if the Shares of Common Stock are not then listed or admitted
to trading on NASDAQ, on the principal national securities exchange on which the Shares of Common
Stock are then listed or admitted to trading or, if not listed or admitted to trading on NASDAQ or
any national securities exchange, the last reported sale price of the Shares of Common Stock as
quoted on NASDAQ or, in case no reported sale takes place, the average of the closing bid and asked
prices as quoted on NASDAQ or any comparable system or, if the Shares of Common Stock is not quoted
on NASDAQ or any comparable system, the closing sale price or, in case no reported sale takes
place, the average of the closing bid and asked prices, as furnished by any two members of FINRA
selected from time to time by the Company for that purpose.



     “Company Request” or “Company Order” means a written request or direction from
the Company to the Trustee signed by two Officers of the Company.



     “Conversion Date” shall have the meaning ascribed to it in Section 4.02 of this
Indenture.



     “Conversion Price” shall have the meaning ascribed to it in Section 4.01 of this
Indenture.



     “Corporate Trust Office of the Trustee” shall be at the address of the Trustee
specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to
the Company.



     “Custodian” means the Trustee, as custodian with respect to the Global Notes or any
successor entity thereto.



     “Default” means any event that is or with the passage of time or the giving of notice
or both would be an Event of Default.



     “Definitive Note” means a certificated Note registered in the name of the Holder
thereof and issued in accordance with Sections 2.06 and 2.12 hereof, substantially in the form of
Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not
have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.



     “Depositary” means, with respect to any Global Notes, the Person specified in Section
2.03 hereof as the Depositary with respect to such Global Notes, and any and all successors



2









 







thereto appointed as depositary hereunder and having become such pursuant to the applicable
provision of this Indenture.



     “Designated Senior Indebtedness” means any Senior Indebtedness existing as of the date
of this Indenture or in which the instrument creating or evidencing the Indebtedness, or any
related agreements or documents to which the Company is a party, expressly provides that such
Indebtedness is “Designated Senior Indebtedness” for purposes of this Indenture (provided that the
instrument, agreement or other document creating or evidencing the Indebtedness may place
limitations and conditions on the right of the Senior Indebtedness to exercise the rights of
Designated Senior Indebtedness).



     “Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system, and
any and all successors thereto.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     “FINRA” means the Financial Industry Regulatory Authority.



     “GAAP” means generally accepted accounting principles in the United States of America
as in effect from time to time, including those principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a significant segment of the
accounting profession, which are in effect from time to time.



     “Global Notes” means, individually and collectively, each of the Global Notes,
substantially in the form of Exhibit A hereto issued in accordance with this Indenture.



     “Global Note Legend” means the legend set forth in Section 2.12(d) hereto, which is
required to be placed on all Global Notes issued under this Indenture.



     “Government Securities” means direct Obligations of, or Obligations guaranteed by, the
United States of America, and the payment for which the United States pledges its full faith and
credit.



     “Hedging Obligations” means, with respect to any Person, the Obligations of such
Person, contingent or otherwise, with respect to an interest rate, currency or other swap, cap,
floor or collar agreement or hedge agreement, forward contract or other similar instrument or
agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement,
provided that such hedging is not incurred primarily for speculative purposes as determined in good
faith by the Board of Directors.



     “Holder” means a Person in whose name a Note is registered.



     “Indebtedness” means, with respect to any Person, without duplication:




     (i) all indebtedness, obligations and other liabilities, contingent or otherwise, (A)
for borrowed money, including overdrafts, foreign exchange contracts, currency



3









 




exchange agreements, interest rate protection agreements, and any loans or advances
from lenders, whether or not evidenced by notes or similar instruments, or (B) evidenced by
credit or loan agreements, bonds, notes, debentures or similar instruments, whether or not
the recourse of the lender is to the whole of the assets of the Company or to only a portion
thereof, other than any account payable or other accrued current liability or obligation
incurred in the ordinary course of business in connection with the obtaining of materials or
services;





     (ii) all reimbursement obligations and other liabilities, contingent or otherwise, with
respect to letters of credit, bank guarantees or bankers’ acceptances;




     (iii) all obligations and liabilities, contingent or otherwise, in respect of (A)
leases required, in conformity with GAAP, to be accounted for as capitalized lease
obligations on the Company’s balance sheet, or (B) under other leases for facilities,
equipment or related assets, whether or not capitalized, entered into or leased for
financing purposes;




     (iv) all obligations and other liabilities, contingent or otherwise, under any lease or
related document, including a purchase agreement, conditional sale or other title retention
agreement, in connection with the lease of real property or improvements thereon (or any
personal property included as part of any such lease) which provides that we are
contractually obligated to purchase or cause a third party to purchase the leased property
or pay an agreed upon residual value of the leased property, including the Company’s
obligations under such lease or related document to purchase or cause a third party to
purchase such leased property or pay an agreed upon residual value of the leased property to
the lessor;




     (v) all Hedging Obligations;




     (vi) all direct or indirect guaranties or similar agreements by the Company in respect
of, and all of the Company’s obligations or liabilities to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness, obligations or
liabilities of another person of the kinds described in clauses (i) through (v);




     (vii) all indebtedness of others secured by a lien on any of the Company’s assets
(whether or not such indebtedness is assumed by the Company); and




     (viii) any and all deferrals, renewals, extensions, refinancings and refundings of, or
amendments, modifications or supplements to, any indebtedness, obligation or liability of
the kinds described in clauses (i) through (vii).



     “Indenture” means this Indenture, as amended or supplemented from time to time.



     “Indirect Participant” means a Person who holds a beneficial interest in a Global Note
through a Participant.



     “Insolvency or Bankruptcy Proceeding” means any insolvency or bankruptcy proceedings,
or any receivership, liquidation, reorganization or other similar proceedings relative



4









 







to the Company or to the property of the Company or the assets of the Company, or in the event
of any proceedings for voluntary liquidation, dissolution or other winding-up of the Company
whether or not involving insolvency or bankruptcy, or any marshalling of the assets and liabilities
of the Company.



     “Interest Payment Date” has the meaning specified in paragraph 1 of the Note, attached
as Exhibit A hereto.



     “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in
the City of New York or in Vancouver, British Columbia or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue on such payment for the intervening period.



     “NASDAQ” means the Nasdaq Stock Market.



     “Notes” has the meaning assigned to it in the recitals to this Indenture.



     “Obligations” means any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, fees and expenses, damages and other liabilities payable under
the documentation governing any Indebtedness.



     “Offering” means the offering of the Notes by the Company.



     “Officer” means, with respect to any Person, the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer, the Treasurer, or any Vice-President
of such Person.



     “Officers’ Certificate” means a certificate signed on behalf of the Company by two
Officers of the Company, one of whom must be the Chief Executive Officer, the Chief Financial
Officer, or the Treasurer of the Company, that meets the requirements of Section 12.05 hereof.



     “Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable
to the Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an
employee of or counsel to the Company, any Subsidiary of the Company or the Trustee.



     “Participant” means, with respect to the Depositary, Euroclear or Clearstream, a
Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with
respect to DTC, shall include Euroclear and Clearstream).



     “Permitted Junior Securities” means Shares of Common Stock or debt securities that are
subordinated to all Senior Indebtedness (and any debt securities issued in exchange for Senior
Indebtedness) to substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Indebtedness as set forth in this Indenture.



     “Person” means any individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated organization or government
or



5









 







agency or political subdivision thereof (including any subdivision or ongoing business of any
such entity).



     “Representative” means this Indenture trustee or other trustee, agent or
representative for any Senior Indebtedness.



     “Responsible Officer,” when used with respect to the Trustee, means any officer within
the Corporate Trust Office of the Trustee (or any successor group of the Trustee) with direct
responsibilities for the administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.



     “SEC” means the Securities and Exchange Commission or any successor thereto.



     “Securities Act” means the Securities Act of 1933, as amended.



     “Senior Indebtedness” with respect to the Company means the principal of, premium, if
any, interest (including any interest accruing after the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is allowed as a claim in the
proceeding), and rent payable on or in connection with, and all fees, costs, expenses and other
amounts accrued or due on or in connection with, Indebtedness of the Company whether secured or
unsecured, absolute or contingent, due or to become due, outstanding on the date of this Indenture
or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Company,
including all deferrals, renewals, extensions or refundings of, or amendments, modifications or
supplements to, the foregoing. Senior indebtedness does not include: (i) indebtedness that
expressly provides that such Indebtedness shall not be senior in right of payment to the Notes or
expressly provides that such Indebtedness is pari passu or junior to the Notes; (ii) any
Indebtedness to any of the Company’s Subsidiaries, other than Indebtedness to the Company’s
Subsidiaries arising by reason of guarantees by the Company of Indebtedness of such Subsidiary to a
Person that is not a Subsidiary of the Company; (iii) any Indebtedness of or amounts owed by the
Company for compensation to employees of the Company, for goods or materials purchased by the
Company in the ordinary course of business, or for services; (iv) any liability for federal, state
or local taxes or other taxes, owed or owing by the Company; (v) the portion of any Indebtedness
that is incurred in violation of this Indenture; and (vi) the Notes issued pursuant to this
Indenture.



     “Shares of Common Stock” means the shares of common stock, par value $1.00 per share,
of the Company, as they exist on the date of this Indenture or any other shares of Capital Stock of
the Company into which the Shares of Common Stock shall be reclassified or changed.



     “Significant Subsidiary” means any Subsidiary of the Company that would be a
“significant subsidiary” as defined in Article 1, Rule 1–02 of Regulation S–X, promulgated pursuant
to the Exchange Act, as such Regulation is in effect on the date of this Indenture.



     “Subsidiary” means, with respect to any Person, any corporation, association or other
business entity of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the election of
directors,



6









 







managers or trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of such Person or a combination thereof.



     “TIA” means the Trust Indenture Act of 1939 as in effect on the date on which this
Indenture is qualified under the TIA; provided, however, that in the event the Trust Indenture Act
of 1939 is amended after such date, “TIA” means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.



     “Trading Day” means:



     (1) if the Shares of Common Stock are quoted on NASDAQ, a day on which trades may be made on
NASDAQ; or



     (2) if the Shares of Common Stock are not so listed, admitted for trading or quoted, any day
other than a Saturday or Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law, executive order or otherwise to close.



     “Trustee” means the party named as such above until a successor replaces it in
accordance with the applicable provisions of this Indenture and thereafter means the successor
serving hereunder.



     “Voting Stock” means any class or classes of Capital Stock or other interests then
outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in
the election of the board of directors, managers or trustees.



     “Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person all the
outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying
shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of
such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.



Section 1.02. Other Definitions.




	 	 	 	 	 
	 	 	Defined in
	Term	 	Section
	“beneficial owner”
	 	 	6.08	 
	“Change in Control”
	 	 	6.08	 
	“Change in Control Offer”
	 	 	6.08	 
	“Change in Control Payment”
	 	 	6.08	 
	“Change in Control Payment Date”
	 	 	6.08	 
	“Change in Control Payment Notice”
	 	 	6.08	 
	“Conversion Agent”
	 	 	2.03	 
	“Conversion Date”
	 	 	4.02	 
	“Conversion Price”
	 	 	4.01	 
	“Current Market Price”
	 	 	4.06	(g)
	“DTC”
	 	 	2.03	 
	“Event of Default”
	 	 	8.01	 
	“Expiration Date”
	 	 	4.06	 






7









 






	 	 	 	 	 
	 	 	Defined in
	Term	 	Section
	“Expiration Time”
	 	 	4.06	 
	“Interest Payment”
	 	 	12.14	 
	“Paying Agent”
	 	 	2.03	 
	“Permitted Liens”
	 	 	6.10	 
	“Purchased Shares”
	 	 	4.06	 
	“Registrar”
	 	 	2.03	 
	“Rights Plan(s)”
	 	 	4.06	 
	“tender offer”
	 	 	4.06	 
	“Transfer Certificate”
	 	 	2.12	(e)(i)






Section 1.03. Incorporation by Reference of Trust Indenture Act.




     Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture.



     The following TIA terms used in this Indenture have the following meanings:



     “indenture securities” means the Notes;



     “indenture security holder” means a Holder of a Note;



     “indenture to be qualified” means this Indenture;



     “indenture trustee” or “institutional trustee” means the Trustee; and



     “obligor” on the Notes means the Company and any successor obligor upon the Notes.



     All other terms used in this Indenture that are defined by the TIA, defined by TIA reference
to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.



Section 1.04. Rules of Construction.




     Unless the context otherwise requires:



     (a) a term has the meaning assigned to it;



     (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with
GAAP;



     (c) “or” is not exclusive;



     (d) words in the singular include the plural, and in the plural include the singular;



     (e) provisions apply to successive events and transactions; and



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     (f) references to sections of or rules under the Securities Act shall be deemed to include
substitute, replacement or successor sections or rules adopted by the SEC from time to time.



ARTICLE 2.

THE NOTES




Section 2.01. Form and Dating.




     (a) General. The Notes and the Trustee’s certificate of authentication shall be substantially
in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in minimum denominations of $1,000 and integral multiples
of $1.00 in excess thereof.



     The terms and provisions contained in the Notes shall constitute, and are hereby expressly
made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of
this Indenture, and each Holder by its acceptance of the Notes, expressly agree to such terms and
provisions and to be bound thereby. However, to the extent any provision of any Note conflicts
with the express provisions of this Indenture, the provisions of this Indenture shall govern and be
controlling.



     (b) Global Notes. Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Note Legend thereon and the “Schedule of
Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form
shall be substantially in the form of Exhibit A attached hereto (but without the Global
Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note”
attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be
specified therein and each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of
outstanding Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the
amount of any increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee,
in accordance with instructions given by the Holder thereof as required by Section 2.12 hereof.



     (c) Euroclear and Clearstream Procedures Applicable. The provisions of the “Operating
Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the
“Management Regulations and Instructions to Participants” of Clearstream shall be applicable to
transfers of beneficial interests in the Global Notes that are held by Participants through
Euroclear or Clearstream.



     None of the Company, the Trustee or any Paying Agent will be responsible or liable for (a) any
records relating to or payments made on account of beneficial interests in a Global Note or (b)
maintaining, supervising or reviewing any records relating to such beneficial interests.



9









 





Section 2.02. Execution and Authentication.




     An Officer shall sign the Notes for the Company by manual or facsimile signature.



     If an Officer whose signature is on a Note no longer holds that office at the time a Note is
authenticated, the Note shall nevertheless be valid.



     A Note shall not be valid until authenticated by the manual signature of the Trustee. The
signature shall be conclusive evidence that the Note has been authenticated under this Indenture.



     Subject to the satisfaction of any conditions set forth herein, the Trustee shall, upon a
Company Order, authenticate Notes from time to time for original issue provided that the aggregate
principal amount of Notes outstanding at any time may not exceed$72,500,000 except as provided in
Section 2.07 hereof.



     The Trustee shall act as initial authenticating agent. Thereafter, the Trustee may, with the
consent of the Company, appoint an authenticating agent acceptable to the Company to authenticate
Notes at the Company’s expense. An authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such Agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.



Section 2.03. Registrar, Paying Agent and Conversion Agent.




     The Company shall maintain or cause to be maintained an office or agency where Notes may be
presented for registration of transfer or for exchange (the “Registrar”), an office or
agency where Notes may be presented for payment (the “Paying Agent”) and an office or
agency where Notes may be presented for conversion (the “Conversion Agent”). The Registrar
shall keep a register of the Notes and of their registration of transfer and exchange. The Company
may appoint one or more co-registrars and one or more additional paying agents and conversion
agents. The term “Registrar” includes any co-registrar, the term “Paying Agent” includes any
additional paying agent and the term “Conversion Agent” includes any additional conversion agent.
The Company may change any Paying Agent, Conversion Agent or Registrar without notice to any
Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar,
Paying Agent or Conversion Agent, the Trustee hereby agrees to act as such. The Company or any of
its Subsidiaries may act as Paying Agent, Conversion Agent or Registrar.



     The Company initially appoints The Depository Trust Company (“DTC”) to act as
Depositary with respect to the Global Notes.



     The Company initially appoints the Trustee to act as the Registrar, Paying Agent and
Conversion Agent and to act as Custodian with respect to the Global Notes.



10









 





Section 2.04. Paying Agent to Hold Money in Trust.




     Prior to 11:00 a.m., New York City time, on each due date of the principal of, premium, if
any, or interest on any Notes, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal, premium, if any, or interest so becoming due. The Company shall require each
Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium if any, or interest on the Notes, and will notify the Trustee of any Default by
the Company in making any such payment. While any such Default continues, the Trustee may require
a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary of the Company) shall have no further
liability for any such money. If the Company or a Subsidiary of the Company acts as Paying Agent,
it shall before 12:30 p.m., New York City time, on each due date of the principal of, premium, if
any, or interest, segregate and hold in a properly established separate trust fund for the benefit
of the Holders all money held by it as Paying Agent. Upon any Insolvency or Bankruptcy Proceedings
relating to the Company, the Trustee shall serve as Paying Agent for the Notes.



Section 2.05. Holder Lists.




     The Trustee shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of all Holders and shall otherwise comply with TIA
§ 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each Interest Payment Date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may reasonably require
of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA
§ 312(a).



Section 2.06. Transfer and Exchange.




     (a) Subject to compliance with any applicable additional requirements contained in Section
2.12, when a Note is presented to the Registrar with a request to register a transfer thereof or to
exchange such Note for an equal principal amount of Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested; provided, however, that
every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed
or accompanied by an assignment form and, if applicable, a transfer certificate each in the form
included in Exhibit A, and in form satisfactory to the Registrar duly executed by the
Holder thereof or its attorney duly authorized in writing. To permit registration of transfers and
exchanges, upon surrender of any Note for registration of transfer or exchange at an office or
agency maintained pursuant to Section 2.03, the Company shall execute and the Trustee shall
authenticate Notes of a like aggregate principal amount at the Registrar’s request. Any exchange or
registration of transfer shall be without charge, except that the Company or the Registrar may
require payment of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto; provided that this sentence shall not apply to any exchange pursuant
to Section 2.07, 2.10, 2.12(a), 3.06, 4.02 (last paragraph), 6.08(a)(10), or 11.05.



11









 





     Neither the Company, any Registrar nor the Trustee shall be required to exchange or register a
transfer of (a) any Notes for a period of 15 days next preceding any mailing of a notice of Notes
to be redeemed, (b) any Notes or portions thereof selected or called for redemption (except, in the
case of redemption of a Note in part, the portion not to be redeemed) or (c) any Notes or portions
thereof in respect of which a Note has been delivered to the Trustee and not withdrawn by the
Holder thereof (except, in the case of the purchase of a Note in part, the portion not to be
purchased).



     All Notes issued upon any registration of transfer or exchange of Notes shall be valid
Obligations of the Company, evidencing the same debt and entitled to the same benefits under this
Indenture, as the Notes surrendered upon such registration of transfer or exchange.



     (b) Any Registrar appointed pursuant to Section 2.03 hereof shall provide to the Trustee such
information as the Trustee may reasonably require in connection with the delivery by such Registrar
of Notes upon registration of transfer or exchange of Notes.



     Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of
a beneficial interest in such Global Note may be effected only through a book-entry system
maintained by (i) the Holder of such Global Note (or its agent), (ii) any Holder of a beneficial
interest in such Global Note or (iii) DTC or any Participant, and that ownership of a beneficial
interest in such Global Note shall be required to be reflected in a book-entry.



     The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on registration of transfer imposed under this Indenture or under applicable
law with respect to any transfer of any interest in any Note (including any transfers between or
among Participants or other beneficial owners of interests in any Global Note) other than to
require delivery of such certificates and other documentation or evidence as are expressly required
by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the
same to determine substantial compliance as to form with the express requirements hereof.



Section 2.07. Replacement Notes.




     If any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any Note, and there is
delivered to the Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or the Trustee (the
receipt of written notice in the case of the Trustee) that such Note has been acquired by a bona
fide purchaser, the Company shall execute and upon its written request the Trustee shall
authenticate and deliver, in exchange for any such mutilated Note or in lieu of any such destroyed,
lost or stolen Note, a new Note of like tenor and principal amount, bearing a certificate number
not contemporaneously outstanding.



     In case any such mutilated, destroyed, lost or stolen Note has become or is about to become
due and payable, or is about to be purchased by the Company pursuant to Article 3 hereof, the
Company in its discretion may, instead of issuing a new Note, pay or purchase such Note, as the
case may be.



12










 





     Upon the issuance of any new Notes under this Section 2.07, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith.



     Every new Note issued pursuant to this Section 2.07 in lieu of any mutilated, destroyed, lost
or stolen Note shall constitute an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.



     The provisions of this Section 2.07 are exclusive and shall preclude (to the extent lawful)
all other rights and remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes.



Section 2.08. Outstanding Notes.




     The Notes outstanding at any time are all the Notes authenticated by the Trustee except for
those canceled by it, those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof, and those described
in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds the Note.



     If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser
as defined in Section 8-303 of the New York Uniform Commercial Code.



     If the principal amount of any Note is considered paid under Section 6.01 hereof, it ceases to
be outstanding and interest on it ceases to accrue.



     If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate of
any thereof) holds, on a Redemption Date, a Change in Control Payment Date, or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such Notes shall be
deemed to be no longer outstanding and shall cease to accrue interest.



Section 2.09. Treasury Notes.




     In determining whether the Holders of the required principal amount of Notes have concurred in
any Notice, direction, waiver or consent, Notes owned by the Company, or by any Affiliate of the
Company, shall be considered as though not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such Notice, direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.



13









 





Section 2.10. Temporary Notes.




     Until certificates representing Notes are ready for delivery, the Company may prepare and
execute, and the Trustee, upon receipt of a Company Order, shall authenticate and deliver temporary
Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have
variations that the Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee,
upon receipt of a Company Order, shall authenticate and deliver Definitive Notes in exchange for
temporary Notes.



     Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.



Section 2.11. Cancellation.




     The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar,
Paying Agent and Conversion Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange, redemption, payment or conversion. The Trustee and no one else
shall cancel all Notes surrendered for registration of transfer, exchange, redemption, payment,
conversion, replacement or cancellation and shall dispose of such Notes as it may determine, in
accordance with its normal procedures. Any Notes which are redeemed, purchased or otherwise
acquired by the Company or any of its Subsidiaries prior to the maturity date may, at the option of
the Company, be surrendered to the Trustee for cancellation. Certification of the destruction of
all canceled Notes, if destroyed, shall be delivered to the Company by the Trustee. The Company
may not reissue, reoffer or resell new Notes to replace Notes that it has paid or that have been
delivered to the Trustee for cancellation or that any Holder has converted pursuant to Article 4.



Section 2.12. Additional Transfer and Exchange Requirements.




     (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole
except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged
by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer
a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is
not appointed by the Company within 120 days after the date of such notice from the Depositary or
(ii) an Event of Default has occurred and is continuing with respect to the Notes. Upon the
occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued
by the Trustee in whose names such Notes are registered as the Depositary shall instruct the
Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in
Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.12 or Section 2.07 or 2.10
hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global
Note may not be exchanged for another Note other than as provided in this Section 2.12(a); however,
beneficial interests in a Global Note may be transferred and exchanged as provided in Section
2.12(b).



14









 





     (b) Transfer And Exchange Of Definitive Notes. In the event that Definitive Notes are issued
in exchange for beneficial interests in Global Notes in accordance with Section 2.12(a) of this
Indenture, on or after such event when a Definitive Note is presented by a Holder to a Registrar
with a request:




     (x) to register the transfer of such Definitive Note to a Person who will take delivery
thereof in the form of a Definitive Note only; or




     (y) to exchange such Definitive Note for an equal principal amount of Definitive Notes
of other authorized denominations,


such Registrar shall register the transfer or make the exchange as requested; provided, however,
that such Definitive Note presented or surrendered for register of transfer or exchange shall be
duly endorsed or accompanied by a written instrument of transfer in accordance with the proviso to
the first sentence of the first paragraph of Section 2.06(a).




     (c) Transfers of Definitive Notes for Beneficial Interest in Global Notes. In the event that
Definitive Notes are issued in exchange for beneficial interests in Global Notes and, thereafter,
the events or conditions specified in Section 2.12(a) which required such exchange shall cease to
exist, the Company shall mail notice to the Trustee and to the Holders stating that Holders may
exchange Definitive Notes for interests in Global Notes by complying with the procedures set forth
in this Indenture and briefly describing such procedures and the events or circumstances requiring
that such notice be given. Thereafter, if Definitive Notes are presented by a Holder to a Registrar
with a request:




     (x) to register the transfer of such Definitive Notes to a Person who will take
delivery thereof in the form of a beneficial interest in a Global Note; or




     (y) to exchange such Definitive Notes for an equal principal amount of beneficial
interests in a Global Note, which beneficial interests will be owned by the Holder
transferring such Definitive Notes,


the Registrar shall register the transfer or make the exchange as requested by canceling such
Definitive Note and causing, or directing the Custodian to cause, the aggregate principal amount of
the applicable Global Note to be increased accordingly and, if no such Global Note is then
outstanding, the Company shall issue and the Trustee, upon receipt of a Company Order, shall
authenticate and deliver a new Global Note; provided, however, that the Definitive Notes presented
or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in accordance with the proviso to the first sentence of the first
paragraph of Section 2.06(a).




15









 








     (d) Legends. Each Global Note shall bear a legend in substantially the following form:




     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS NOTE IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.



     (e) Transfers to the Company. Nothing in this Indenture or in the Notes shall prohibit the
sale or other transfer of any Notes (including beneficial interests in Global Notes) to the Company
or any of its Subsidiaries, subject to Section 2.11 hereof.



Section 2.13. CUSIP Numbers.




     The Company in issuing the Notes may use “CUSIP” and “ISIN” numbers (if then generally in
use), and, if so, the Trustee shall use “CUSIP” and “ISIN” numbers in notices of redemption or
purchase as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption or purchase and that reliance may be placed only on the
other identification numbers printed on the Notes, and any such redemption or purchase shall not be
affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee
of any change in the “CUSIP” or “ISIN” numbers.




16









 






ARTICLE 3.

REDEMPTION AND PREPAYMENT




Section 3.01. Notices to Trustee.




     If the Company elects to redeem Notes pursuant to the optional redemption provisions of
Section 3.07 hereof, it shall furnish to the Trustee, at least 45 days but not more than 60 days
before a redemption date, an Officers’ Certificate setting forth (i) the clause of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount
of Notes to be redeemed and (iv) the redemption price.



Section 3.02. Selection of Notes to Be Redeemed.




     If fewer than all the Notes are to be redeemed at any time, the Trustee shall select the Notes
to be redeemed by lot, or in the Trustee’s discretion, on a pro rata basis. In the event of
partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption. If a portion of Notes is selected
for partial redemption and a Holder elects to convert a portion of Notes pursuant to Article 4
hereof, the converted portion of the Notes will be deemed to be the portion selected for
redemption. Notes which have been converted during a selection of Notes to be redeemed may be
treated by the Trustee as outstanding for the purpose of such selection.



     The Trustee shall promptly notify the Company in writing of the Notes selected for redemption
and, in the case of any Note selected for partial redemption, the principal amount thereof to be
redeemed. Notes and portions of Notes selected shall be in minimum denominations of $1,000 or
integral multiples of $1.00 in excess thereof; except that if all the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for redemption.



Section 3.03. Notice of Redemption.




     At least 30 days but not more
than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, or in the case of Notes held in
book-entry form, by electronic transmission, a notice of redemption to each Holder whose Notes are to
be redeemed at its registered address.



     The notice shall identify the Notes to be redeemed and shall state:



     (a) the redemption date;



     (b) the redemption price;



     (c) the then current Conversion Price;



17









 





     (d) if any Note is being redeemed in part, the portion of the principal amount of such Note to
be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued upon cancellation of the original
Note;



     (e) the name and address of the Paying Agent and Conversion Agent;



     (f) that Notes called for redemption must be presented and surrendered to a Paying Agent to
collect the redemption price;



     (g) that Holders who wish to convert Notes must surrender such Notes for conversion no later
than the close of business on the Business Day immediately preceding the redemption date and must
satisfy the other requirements in paragraph 8 of the Notes;



     (h) that, unless the Company Defaults in making such redemption payment, interest on Notes
called for redemption ceases to accrue on and after the redemption date;



     (i) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes
called for redemption are being redeemed;



     (j) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN
number, if any, listed in such notice or printed on the Notes.



     At the Company’s request, the Trustee shall give the notice of redemption in the Company’s
name and at its expense; provided, however, that the Company shall have delivered to the Trustee,
at least 45 days prior to the redemption date, an Officers’ Certificate requesting that the Trustee
give such notice and a form of the notice to be delivered to Holders setting forth the information
to be stated in such notice as provided in the preceding paragraph.



Section 3.04. Effect of Notice of Redemption.




     Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the redemption price. A
notice of redemption may not be conditional.



Section 3.05. Deposit of Redemption Price.




     Prior to 11:00 a.m., New York City time, on the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent immediately available funds sufficient to pay the
redemption price of, and accrued interest on, all Notes to be redeemed on that date. The Trustee
or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or
the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of,
and accrued interest on, all Notes to be redeemed.



     If the Company complies with the provisions of the preceding paragraph, on and after the
redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for
redemption. If a Note is redeemed on or after an interest payment record date but on or prior to
the related Interest Payment Date, then any accrued and unpaid interest shall be paid to the same



18









 




Person to whom the Company pays the principal amount of such Note. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the failure of the Company
to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the
redemption date until such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in Section 6.01 hereof.




Section 3.06. Notes Redeemed in Part.




     Upon surrender of a Note that is redeemed in part, the Company shall issue, and, upon the
Company’s written request, the Trustee shall authenticate for the Holder at the expense of the
Company, a new Note equal in principal amount to the unredeemed portion of the Note surrendered.



Section 3.07. Optional Redemption.




     (a) The Company shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to July 15, 2011. Thereafter the Company shall have the option to redeem the Notes in whole,
or in part, upon not less than 30 nor more than 60 days’ notice by mail to Holders of the Notes, at
100% of the principal amount of the Notes together with accrued interest, if any, up to, but not
including, the redemption date; provided that if the redemption date falls after an interest
payment record date and on or before an Interest Payment Date, the applicable interest payment
shall be payable to the same Person to whom the Company pays the principal amount of such Note upon
redemption.



     (b) Any redemption pursuant to this Section 3.07 shall be made in accordance with the
provisions of Section 3.01 through 3.06 hereof.



Section 3.08. Mandatory Redemption; No Sinking Fund.




     The Company shall not be required to (a) make mandatory redemption payments with respect to
the Notes or (b) set aside any funds for the redemption of the Notes.



ARTICLE 4.

CONVERSION




Section 4.01. Conversion Privilege.




     A Holder of a Note may convert such Note into fully paid and nonassessable Shares of Common
Stock at any time prior to the close of business on the last Business Day prior to maturity at the
Conversion Price (as defined below) then in effect, except that, with respect to any Note called
for redemption pursuant to Section 3.07 or submitted or presented for purchase pursuant to Section
6.08, such conversion right shall terminate at the close of business on the Business Day
immediately preceding the redemption date or Change in Control Payment Date, as the case may be
(unless the Company shall Default in making the redemption payment or Change in Control Payment, as
the case may be, when it becomes due, in which case the conversion right shall terminate at the
close of business on the date such Default is cured and such Note is redeemed or purchased, as the
case may be). The number of Shares of Common



19









 




Stock issuable upon conversion of a Note will be determined by the Company by dividing the
principal amount of such Note by the conversion price in effect on the Conversion Date (the
“Conversion Price”). The Trustee shall have no obligation to calculate the Conversion
Price nor shall it have any obligation to verify or certify the Company’s calculation of the
Conversion Price and shall have no liability relating thereto.




     The initial Conversion Price is $3.30 per share and is subject to adjustment as provided for
in this Article 4.



     A Holder
may convert a portion of a Note equal to any integral multiple of $1,000 or integral multiples of
$1.00 in excess thereof. Provisions of this Indenture that apply to conversion of all of a Note
also apply to conversion of a portion of it.



     A Note in respect of which a
Holder has delivered a Change in Control Payment Notice pursuant
to Section 6.08 exercising the option of such Holder to require the Company to purchase such Note
may be converted only if such Change in Control Payment Notice is withdrawn by a written notice of
withdrawal delivered to a Paying Agent prior to the close of business on the Business Day
immediately preceding the Change in Control Payment Date in accordance with Section 6.08.



     A Holder of Notes is not entitled to any rights of a Holder of Shares of Common Stock until,
and only to the extent that, such Holder has effectively converted its Notes to Shares of Common
Stock pursuant to this Article 4.



Section 4.02. Conversion Procedure.




     To convert a Note, a Holder must satisfy all of the requirements in paragraph 8 of the Notes.
The first Business Day on which the Holder satisfies all those requirements is the conversion date
(the “Conversion Date”). As soon as practicable after the Conversion Date, the Company
shall deliver or cause to be delivered upon the order of the Holder a certificate for the number of
whole Shares of Common Stock issuable upon the conversion and cash in lieu of any fractional share
determined pursuant to Section 4.03 hereof. The Person in whose name the certificate is registered
shall become the shareholder of record on the Conversion Date and, as of such date, such Person’s
rights as a Holder shall cease; provided, however, that no surrender of a Note on any date when the
stock transfer books of the Company shall be closed shall be effective to constitute the Person
entitled to receive the Shares of Common Stock upon such conversion as the shareholder of record of
such Shares of Common Stock on such date, but such surrender shall be effective to constitute the
Person entitled to receive such Shares of Common Stock as the shareholder of record thereof for all
purposes at the close of business on the next succeeding Business Day on which such stock transfer
books are open; provided further, however, that such conversion shall be at the Conversion Price in
effect on the Conversion Date.



     No payment or other adjustment shall be made for accrued interest or dividends or
distributions on any Shares of Common Stock issued upon conversion of the Notes. If any Notes are
converted during any period after the close of business on any record date for the payment of an
installment of interest but prior to the opening of business on the next Interest Payment Date,
interest for such Notes will be paid on the next Interest Payment Date, notwithstanding such



20









 




conversion, to the Holders of such Notes. Any Notes that are,
however, delivered to the
Company for conversion during the period after any record date but prior to the opening of business
on the next Interest Payment Date must, except as described in the next sentence, be accompanied by
funds equal to the interest payable on such Interest Payment Date on the principal amount of Notes
being converted. If the Company (i) elects to redeem Notes pursuant to Article 3 hereof or (ii)
offers to repurchase Notes upon a Change in Control pursuant to Section 6.08 hereof, on a date that
is during that period from the close of business on a record date for the payment of an installment
of interest and ending on the close of business on the next Interest Payment Date (or if such
Interest Payment Date is not a Business Day, the Business Day after the Interest Payment Date), and
any Holders surrender the Notes or portions thereof for conversion on a date that is not an
Interest Payment Date, such Holders shall receive interest for the period from the Interest Payment
Date next preceding the Conversion Date (it being understood that such Holders that surrender Notes
or portions thereof for conversion following any redemption notice or Change in Control Offer shall
not be required to pay such funds as described in the third sentence of this paragraph). No
fractional shares will be issued upon conversion, but a cash adjustment will be made for any
fractional shares.




     If a Holder converts more than one Note at the same time, the number of whole Shares of Common
Stock issuable upon the conversion shall be based on the total principal amount of Notes converted.



     Upon surrender of a Note that is converted in part, the Trustee shall authenticate for the
Holder a new Note equal in principal amount to the unconverted portion of the Note surrendered.



Section 4.03. Fractional Shares.




     The Company will not issue fractional Shares of Common Stock upon conversion of a Note. In
lieu thereof, the Company will pay an amount in cash based upon the Closing Sale Price of the
Shares of Common Stock on the last Trading Day prior to the Conversion Date.



Section 4.04. Taxes on Conversion.




     Except as provided in the next sentence, the Company will pay any and all taxes (other than
taxes on income) and duties that may be payable in respect of the issue or delivery of Shares of
Common Stock on conversion of Notes pursuant hereto. A Holder delivering a Note for conversion
shall be liable for and will be required to pay any tax or duty which may be payable in respect of
any transfer involved in the issue and delivery of Shares of Common Stock in a name other than that
of the Holder of the Note or Notes to be converted, and no such issue or delivery shall be made
unless the Person requesting such issue has paid to the Company the amount of any such tax or duty,
or has established to the satisfaction of the Company that such tax or duty has been paid.



Section 4.05. Company to Provide Stock.




     The Company shall at all times reserve and keep available, free from preemptive rights, out of
its authorized but unissued Shares of Common Stock, solely for the purpose of issuance upon
conversion of Notes as herein provided, a sufficient number of Shares of Common Stock to permit the
conversion of all outstanding Notes for Shares of Common Stock. All Shares of



21









 




Common Stock which may be issued upon conversion of the Notes shall be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights and free of any lien or
adverse claim when so issued.




Section 4.06. Adjustment of Conversion Price.




     The Conversion Price shall be subject to adjustment by the Company from time to time as
follows:



     (a) Stock split and combinations. In case the Company, at any time or from time to time after
the issuance date of the Notes, (a) subdivides or splits the outstanding Shares of Common Stock,
(b) combines or reclassifies the outstanding Shares of Common Stock into a smaller number of shares
or (c) issues by reclassification of the Shares of Common Stock any shares of its Capital Stock,
then the Conversion Price in effect immediately prior to that event or the record date for that
event, whichever is earlier, shall be adjusted by multiplying such Conversion Price by a fraction,
the numerator of which shall be the number of Shares of Common Stock outstanding immediately prior
to such subdivision or combination and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after giving effect to such subdivision or combination. Such
reduction or increase, as the case may be, shall become effective immediately after the opening of
business on the Business Day following the day upon which such subdivision or combination becomes
effective.



     (b) Stock Dividends in Shares of Common Stock. In case the Company, at any time or from time
to time after the issuance date of the Notes, pays a dividend or makes a distribution in Shares of
Common Stock on any class of its Capital Stock, other than dividends or distributions of Shares of
Common Stock or other securities with respect to which adjustments are provided in paragraph (a)
above or with respect to payments of interest or dividend obligations with respect to a particular
series of Capital Stock in accordance with the terms of such Capital Stock, the Conversion Price
will be reduced by multiplying such Conversion Price by a fraction:




     (i) the numerator of which will be the number of Shares of Common Stock outstanding;
and




     (ii) the denominator of which will be the sum of that number of shares and the total
number of shares issued in that dividend or distribution.



     Such reduction shall become effective immediately after the opening of business on the
Business Day immediately following the record date fixed for such determination of shareholders
entitled to receive such dividend or distribution.



     (c) Issuance of Rights or Warrants. In case the Company issues to all or substantially all
holders of its Shares of Common Stock rights or warrants entitling those holders for a period of
not more than 60 days to subscribe for or purchase its Shares of Common Stock or securities
convertible into its Shares of Common Stock at a price per share (or having a conversion, exchange
or exercise price per share) less than the Current Market Price, the Conversion Price in effect at
the opening of business on the Business Day immediately following the record date fixed for
determination of shareholders entitled to receive those rights or warrants will be reduced by
multiplying such Conversion Price by a fraction:



22









 






     (i) the numerator of which is the sum of the number of Shares of Common Stock
outstanding at the close of business on that record date and the number of Shares of Common
Stock (or Shares of Common Stock issuable pursuant to such convertible, exchangeable or
exercisable securities) that the aggregate offering price of the total number of Shares of
Common Stock (or convertible, exchangeable or exercisable securities) so offered for
subscription or purchase (or the aggregate conversion, exchange or exercise price of the
convertible securities so offered) would purchase at the Current Market Price per share of
Common Stock; and




     (ii) the denominator of which is the sum of the number of Shares of Common Stock
outstanding at the close of business on that record date and the number of additional Shares
of Common Stock so offered for subscription or purchase (or into which the convertible,
exchangeable or exercisable securities so offered are convertible, exchangeable or
exercisable).


Such reduction shall become effective at the opening of business on the Business Day immediately
following the record date fixed for determination of shareholders entitled to receive such rights
or warrants.




     For purposes of this Section 4.06(c), the issuance of rights or warrants to subscribe for or
purchase securities convertible into or exchangeable or exercisable for Shares of Common Stock will
be deemed to be the issuance of rights or warrants to purchase Shares of Common Stock into which
those securities are convertible at an aggregate offering price equal to the sum of the aggregate
offering price of those securities and the minimum aggregate amount, if any, payable upon
conversion of those securities into Shares of Common Stock. This adjustment will be made
successively whenever any such event occurs. For purposes of this Section 4.06(c), upon conversion
of the Notes into Shares of Common Stock, to the extent that a shareholder rights plan (the
“Rights Plan”) is in effect upon such conversion, the Holders of Notes will receive, in
addition to the Shares of Common Stock, the rights described in such Rights Plan (whether or not
the rights have separated from the Shares of Common Stock at the time of conversion), upon the
terms of and subject to the limitations set forth in the Rights Plan. Any distribution of rights
or warrants pursuant to the Rights Plan complying with the requirements set forth in the
immediately preceding sentence of this paragraph shall not constitute a distribution of rights or
warrants for purposes of this Section 4.06(c).



     (d) Distribution of Indebtedness, Securities or Assets. In case the Company shall distribute
to all or substantially all Holders of its Shares of Common Stock any shares of Capital Stock of
the Company (other than Shares of Common Stock), evidences of Indebtedness or other non-cash
assets, or shall distribute to all or substantially all holders of its Shares of Common Stock
rights or warrants to subscribe for or purchase any of its securities but excluding (w) those
rights and warrants referred to in Section 4.06(c); (x) the distribution of rights to all holders
of Shares of Common Stock pursuant to the adoption of a Rights Plan or the detachment of such
rights under the terms of such Rights Plan; (y) dividends or distributions of stock referred to in
Section 4.06(b) and (z) dividends and distributions paid exclusively in cash (such capital stock,
evidence of its indebtedness, other non-cash assets or securities being distributed hereinafter in
this Section 4.06(d) called the “distributed assets”)), then in each such case the Conversion Price
in effect immediately before the close of business on the record date fixed for the determination



23









 




of shareholders entitled to such distribution shall be adjusted by multiplying such current
Conversion Price by a fraction:





     (i) the numerator of which shall be the Current Market Price per share of the Shares of
Common Stock on the record date fixed for the determination of shareholders entitled to such
distribution less the fair market value on such record date (as determined by the Board of
Directors, whose determination shall be conclusive evidence of such fair market value and
which shall be evidenced by an Officers’ Certificate delivered to the Trustee) of the
portion of the Capital Stock, evidences of Indebtedness or other non-cash assets so
distributed or of such rights or warrants attributable to one Share of Common Stock
(determined on the basis of the number of Shares of Common Stock outstanding on the record
date); and




     (ii) the denominator of which shall be the Current Market Price per share of a Share
of Common Stock on such record date.


Such adjustment shall be made successively whenever any such distribution is made and shall become
effective immediately following the record date for the determination of shareholders entitled to
receive such distribution.




     (e) All-cash Distributions. In case the Company shall, by dividend or otherwise, at any time
make a distribution of cash (excluding any cash that is distributed as part of a distribution
requiring a Conversion Price adjustment pursuant to subsection (f) below) to all or substantially
all holders of Shares of Common Stock, the Conversion Price shall be adjusted by multiplying the
Conversion Price in effect immediately before the close of business on the record date for the
determination of holders of Shares of Common Stock entitled to such distribution by a fraction: (A)
whose numerator shall be an amount equal to (a) the Current Market Price per Share of Common Stock
on such record date (as determined pursuant to Section 4.06(g)) less (b) the lesser of (i) the
amount of the distribution per Share of Common Stock and (ii) such Current Market Price per Share
of Common Stock and (B) whose denominator shall be the Current Market Price per Share of Common
Stock; provided, however, that the Conversion Price shall not be adjusted pursuant to this Section
4.06(e) to the extent, and only to the extent, such adjustment would cause the Conversion Price to
be reduced to less than one cent ($0.01). An adjustment to the Conversion Price pursuant to this
Section 4.06(e) shall become effective immediately prior to the opening of business on the day
immediately following such record date.



     (f) Tender Offer Purchases. In case any tender offer made by the Company or any of its
Subsidiaries for Shares of Common Stock shall expire and such tender offer (as amended upon the
expiration thereof) shall involve the payment to shareholders of aggregate consideration in an
amount (determined as the sum of the aggregate amount of cash consideration and the aggregate fair
market value (as determined by the Board of Directors, whose determination shall be conclusive
evidence thereof and which shall be evidenced by an Officers’ Certificate delivered to the Trustee
thereof) of any other consideration) expressed as an amount per Share of Common Stock validly
tendered or exchanged, and not withdrawn, pursuant to such tender offer or exchange offer as of the
Expiration Time (as defined below) that exceeds the Current Market Price as of the day next
succeeding the last date (the “Expiration Date”) tenders could have been made pursuant to
such tender offer (as it may be amended) (the last time at which such tenders



24









 




could have been made on the Expiration Date is hereinafter sometimes called the
“Expiration Time”), then, immediately prior to the opening of business on the first
Business Day after the Expiration Date, the Conversion Price shall be reduced by multiplying the
Conversion Price in effect immediately prior to close of business on the Expiration Date by a
fraction:





     (i) the numerator of which shall be the product of the number of Shares of Common Stock
outstanding (including tendered shares but excluding any shares held in the treasury of the
Company) at the Expiration Time multiplied by the Current Market Price per share on the
Expiration Date; and




     (ii) the denominator of which shall be the sum of (x) the aggregate consideration
(determined as aforesaid) payable to shareholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all Shares of Common Stock validly tendered
and not withdrawn as of the Expiration Time (the Shares of Common Stock deemed so accepted,
up to any such maximum, being referred to as the “Purchased Shares”) and (y) the
product of (a) an amount equal to (I) the number of Shares of Common Stock outstanding at
the Expiration Time less (II) any Purchased Shares (and excluding any shares held in the
treasury of the Company and its Subsidiaries) and (b) the Current Market Price per share on
the Expiration Date.


such reduction (if any) to become effective immediately prior to the opening of business on the
Business Day following the Expiration Date. In the event that the Company would be obligated to
purchase Shares of Common Stock pursuant to any such tender offer, but the Company is permanently
prevented by applicable law from effecting any or all such purchases or any or all such purchases
are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would
have been in effect based upon the number of Shares of Common Stock actually purchased. If the
application of this Section 4.06(f) to any tender offer would result in an increase in the
Conversion Price, no adjustment shall be made for such tender offer under this Section 4.06.




     For purposes of this Section 4.06, the term “tender offer” shall mean and include both
tender offers and exchange offers, all references to “purchases” of shares in tender offers (and
all similar references) shall mean and include both the purchase of shares in tender offers and the
acquisition of shares pursuant to exchange offers, and all references to “tendered shares” (and all
similar references) shall mean and include shares tendered in both tender offers and exchange
offers. Notwithstanding the foregoing sentence, “tender offer” shall not include open market
purchases in compliance with Section 10b-18 under the Exchange Act or negotiated purchases that are
not subject to Section 14(d) of the Exchange Act.



     (g) For the purpose of any computation under subsections (c), (d), (e) and (f) of this Section
4.06, the “Current Market Price” on any date shall be deemed to be the average of the daily Closing
Sale Prices per share of Common Stock for the 20 consecutive Trading Days commencing 30 Trading
Days before (i) the Expiration Date with respect to distributions or tender offers under subsection
(f) of this Section 4.06 or (ii) the record date with respect to distributions, issuances or other
events requiring such computation under subsection (c), (d) or (e) of this Section 4.06. If no
such prices are available, Current Market Price shall be the fair value of one Share of Common
Stock as determined by the Board of Directors (which fair value



25









 




shall be conclusively determined by the Board and evidenced by an Officers’ Certificate
delivered to the Trustee).




     (h) If any distribution in respect of which an adjustment to the Conversion Price is required
to be made therefor as of the record date or Determination Date or Expiration Date is not
thereafter made or paid by the Company for any reason, the Conversion Price shall be readjusted to
the Conversion Price which would then be in effect if such record date had not been fixed or the
effective date or Determination Date or Expiration Date had not occurred.



Section 4.07. No Adjustment.




     No adjustment in the Conversion Price shall be required until cumulative adjustments amount to
at least 1% of the Conversion Price as last adjusted; provided, however, that any adjustments which
by reason of this Section 4.07 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article 4 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be. No adjustment need be
made for rights to purchase Shares of Common Stock pursuant to a Company plan for reinvestment of
dividends or interest. No adjustment need be made for a change in the par value or no par value of
the Shares of Common Stock.



Section 4.08. Other Adjustments.




     (a) In the event that, as a result of an adjustment made pursuant to Section 4.06 hereof, the
Holder of any Note thereafter surrendered for conversion shall become entitled to receive any
shares of Capital Stock of the Company other than Shares of Common Stock, thereafter the Conversion
Price of such other shares so receivable upon conversion of any Note shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to Shares of Common Stock contained in this Article 4.



     (b) In the event that Shares of Common Stock are not delivered after the expiration of any of
the rights or warrants referred to in Sections 4.06(c) and (d) hereof, the Conversion Price shall
be readjusted to the Conversion Price which would otherwise be in effect had the adjustment made
upon the issuance of such rights or warrants been made on the basis of delivery of only the number
of Shares of Common Stock actually delivered.



     (c) Except as set forth in this Article 4, the Company shall not adjust the Conversion Price
for (i) the issuance of its Shares of Common Stock or any securities convertible into or
exchangeable therefor or (ii) the right to purchase its Shares of Common Stock or any securities
convertible or exchangeable therefor.



Section 4.09. Voluntary Adjustments.




     The Company may make such reductions in the Conversion Price, in addition to any required by
Section 4.06 hereof, as it determines in its discretion to be advisable in order that any stock
dividend, subdivision of shares, distribution or rights to purchase stock or securities or
distribution of securities convertible into or exchangeable for stock made by the Company to its
shareholders will not be taxable to the recipients thereof; provided, however, that in no event
shall the Company reduce the Conversion Price pursuant to this Section 4.09 if such reduction



26









 




would require shareholder approval under NASDAQ rules and regulations in effect at the time of
the reduction, unless such shareholders shall have duly approved such reduction.




Section 4.10. Notice of Adjustment.




     Whenever the Conversion Price is adjusted as herein provided, the Company shall promptly mail
to Holders at the addresses appearing on the Registrar’s books a notice of the adjustment and file
with the Trustee an Officers’ Certificate setting forth the adjusted Conversion Price and showing
in reasonable detail the facts requiring the adjustment and the manner of computing it. The
Officers’ Certificate shall be conclusive evidence of the correctness of such adjustment. Unless
and until a Responsible Officer of the Trustee shall receive written notice of an adjustment of the
Conversion Price, the Trustee may assume without inquiry that the Conversion Price has not been
adjusted and that the last Conversion Price of which it has knowledge remains in effect. Failure
to deliver such notice shall not affect the legality or validity of any such adjustment.



Section 4.11. Notice of Certain Transactions.




     In the event that:



     (1) the Company takes any action which would require an adjustment in the Conversion Price;



     (2) the Company takes any action that would require a supplemental indenture pursuant to
Section 4.12; or



     (3) there shall occur the voluntary or involuntary dissolution, liquidation or winding up of
the Company;


the Company shall mail to Holders at the addresses appearing on the Registrar’s books and the
Trustee a notice stating the proposed record or effective date, as the case may be, to permit a
Holder of a Note to convert such Note into Shares of Common Stock prior to the record date for or
the effective date of the transaction in order to receive the rights, warrants, securities or
assets which a holder of Shares of Common Stock on that date may receive. The Company shall mail
the notice at least 20 days before such date; however, neither the failure to mail such notice nor
any defect therein shall affect the validity of any transaction referred to in clauses (1), (2) or
(3) of this Section 4.11.





			
	Section 4.12.	 	Effect of Reclassifications, Consolidations, Mergers or Sales on Conversion
Privilege.





     If any of the following shall occur, namely:



     (1) any reclassification or change of outstanding Shares of Common Stock issuable upon
conversion of Notes (other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination or as a result of a
reincorporation of the Company in another jurisdiction);



27









 





     (2) any consolidation or merger to which the Company is a party other than a merger in which
the Company is the continuing corporation and which does not result in any reclassification of, or
change (other than a change in name, or par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination) in, outstanding Shares of
Common Stock; or



     (3) any sale or conveyance of all or substantially all the property or business of the Company
as an entirety;


the Company, or such successor or purchasing corporation, as the case may be, shall, as a condition
precedent to such reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee
(which shall comply with the TIA as in force at the date of execution of such supplemental
indenture if such supplemental indenture is then required to so comply) providing that the Holder
of each Note then outstanding shall have the right to convert such Note into the kind and amount of
shares of stock, other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a Holder of the number of
Shares of Common Stock deliverable upon conversion of such Note immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance assuming such Holder failed to
exercise such Holder’s rights of election, if any, as to the kind or amount of shares of stock and
other securities and property (including cash) receivable upon such reclassification, change,
consolidation, merger, sale or conveyance. In the event that the Shares of Common Stock are
exchanged or substituted for other securities in connection with any such reclassification, change,
consolidation, merger, sale or conveyance, such supplemental Indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article 4. If, in the case of any
such consolidation, merger, sale or conveyance, the stock or other securities and property
(including cash) receivable thereupon by a holder of Shares of Common Stock includes shares of
stock or other securities and property of a corporation other than the successor or purchasing
corporation, as the case may be, in such consolidation, merger, sale or conveyance, then such
supplemental indenture shall contain such additional provisions to protect the interests of the
Holders of the Notes as the Board of Directors of the Company shall reasonably consider necessary
by reason of the foregoing. The provision of this Section 4.12 shall similarly apply to successive
consolidations, mergers, sales or conveyances.




     In the event the Company shall execute a supplemental indenture pursuant to this Section 4.12,
the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the
reasons therefor, the kind or amount of shares of stock or securities or property (including cash)
receivable by Holders of the Notes upon the conversion of their Notes after any such
reclassification, change, consolidation, merger, sale or conveyance and any adjustment to be made
with respect thereto.



Section 4.13. Trustee’s Disclaimer.




     The Trustee has no duty to determine when an adjustment under this Article 4 should be made,
how it should be made or what such adjustment should be, but may accept as conclusive evidence of
the correctness of any such adjustment, and shall be protected in relying upon, the



28









 




Officers’ Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 4.10 hereof. The Trustee makes no representation as to the validity or
value of any securities or assets issued upon conversion of Notes, and the Trustee shall not be
responsible for the Company’s failure to comply with any provisions of this Article 4.




     The Trustee shall not be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture executed pursuant to Section 4.12, but may
accept as conclusive evidence of the correctness thereof, and shall be protected in relying upon,
the Officers’ Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 4.12 hereof.



Section 4.14. Voluntary Reduction.




     The Company from time to time may, subject to approval from the Toronto Stock Exchange, reduce
the Conversion Price by any amount for any period of time if the period is at least 20 days and if
the Board of Directors determines that such reduction would be in the best interest of the Company
and the Company provides 15 days’ prior notice to the Holders of any reduction in the Conversion
Price pursuant to this Section 4.14; provided, however, that in no event shall the Company reduce
the Conversion Price if such reduction would require shareholder approval under NASDAQ rules and
regulations in effect at the time of the reduction, unless such shareholders shall have duly
approved such reduction.



ARTICLE 5.

SUBORDINATION




Section 5.01. Agreement to Subordinate.




     The Company agrees, and each Holder by accepting a Note agrees, that the Indebtedness
evidenced by the Notes (including the principal of, premium, if any, and interest on all the Notes
and the redemption price with respect to any Notes being called for redemption and the Change in
Control Payment with respect to all Notes subject to purchase
pursuant to Section 6.08 hereof) are
subordinated in right of payment, to the extent and in the manner provided in this Article 5, to
the prior payment in full in cash of all Senior Indebtedness (whether outstanding on the date
hereof or hereafter created, incurred, assumed or guaranteed), and that such subordination is
intended for the benefit of, and may be enforced by, the holders of Senior Indebtedness.



     The Indebtedness evidenced by the Notes shall rank pari passu with all other senior
subordinated Indebtedness of the Company including, without limitation, the Old Notes.



Section 5.02. Liquidation; Dissolution; Bankruptcy.




     (a) Upon payment or distribution of assets of the Company, of any kind or character, including
without limitation cash, property or securities, to creditors pursuant to or as a result of any
Insolvency or Bankruptcy Proceeding, all principal, interest (including interest after the
commencement of any Insolvency or Bankruptcy Proceeding at the Default rate set forth in the
agreement or instrument relating to such Senior Indebtedness whether or not such interest is an
allowable claim under such proceeding), or other amounts payable on the Senior Indebtedness or
claims relating thereto, shall first be paid in full, or payment thereof be provided for in cash or
in



29









 




a manner satisfactory to the Holders of such Senior Indebtedness, before either the holders of
the Indebtedness evidenced by the Notes or the Trustee under this Indenture shall be entitled to
retain any assets so paid or distributed in respect of this Indenture (except for Permitted Junior
Securities); and upon any such Insolvency or Bankruptcy Proceeding any payment or distribution of
assets of the Company, of any kind or character, including without limitation, cash, property or
securities, to which the Holders of the Notes or the Trustee under this Indenture would be entitled
except for the provisions of this Article 5, shall be paid by the Company or by any receiver,
administrator, trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Holders of the Notes or by the Trustee under this Indenture if
received by them or it, directly to the Holders of the Senior Indebtedness or to their
representatives under the agreement or instrument pursuant to which such Senior Indebtedness may
have been issued as their respective interests may appear, to the extent necessary to pay all
Senior Indebtedness in full, in cash or in a manner satisfactory to the Holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders of the Notes or by the
Trustee under this Indenture (except for Permitted Junior Securities).




     (b) Upon any distribution of assets of the Company referred to in this Article 5, the Trustee,
subject to Article 9, and the Holders of Notes will be entitled to rely upon a certificate of the
liquidation trustee or agent or other Person making any distribution to the Trustee or to the
Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount paid or distributed thereon and all other facts
pertinent thereto or to this Article 5.



Section 5.03. Default on Senior Indebtedness.




     The Company may not pay the principal of or interest on the Notes or make any deposit pursuant
to Section 2.04 and may not repurchase, redeem or otherwise retire any Notes if (i) any principal,
premium or interest in respect of any Designated Senior Indebtedness is not paid within any
applicable grace period (including at maturity) or (ii) any other default on Designated Senior
Indebtedness occurs and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms unless, in either case, (x) the default has been cured or waived and any
such acceleration has been rescinded or (y) such Designated Senior Indebtedness has been paid in
full in cash or cash equivalents. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration), the Company may not pay
the Notes for a period (a “Payment Blockage Period”) commencing upon the receipt by the
Company and the Trustee of written notice of such default from the Representative of such
Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period (a
“Payment Blockage Notice”) and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the Company from the
Representative who gave such Payment Blockage Notice, (ii) by repayment in full in cash or cash
equivalents of such Senior Indebtedness or (iii) because the default giving rise to such Payment
Blockage Notice is no longer continuing). Notwithstanding the provisions described in the
immediately preceding sentence, unless the holders of such Designated Senior Indebtedness or the
Representative of such holders shall have accelerated the maturity of such



30









 




Designated Senior Indebtedness and shall not have rescinded such acceleration, the Company may
(unless otherwise prohibited pursuant to the first sentence of this Section 5.03) resume payments
on the Notes after such Payment Blockage Period. Not more than one Payment Blockage Notice with
respect to all issues of Designated Senior Indebtedness may be given in any consecutive 365-day
period, irrespective of the number of defaults with respect to one or more issues of Designated
Senior Indebtedness during such period; provided, further, that no new Payment Blockage Notice may
be given unless all scheduled payments on the Notes that have become due and payable have been paid
in full to the Holders. Any default that existed or was continuing on the date of delivery of any
Payment Blockage Notice shall not be permitted to be the basis for any subsequent Payment Blockage
Notice.




Section 5.04. Acceleration of Notes.




     If payment of the Notes is accelerated because of an Event of Default, the Company shall
promptly notify all holders of Senior Indebtedness or their Representatives known to the Company of
the acceleration.



Section 5.05. When Distribution Must Be Paid Over.




     If any payment or distribution of any kind, including without limitation, cash, property or
securities, is made by way of set-off or otherwise to the Holders of the Notes or to the Trustee
under this Indenture that because of these subordination provisions should not have been made to
it, such Trustee or Holder who receives the distribution shall segregate such distribution from its
other funds and property and shall hold it in trust for the benefit of, and upon demand shall pay
it over to, the holders of Senior Indebtedness or to their Representatives under the agreement or
instrument pursuant to which such Senior Indebtedness may have been issued or incurred as their
respective interests may appear, for application to, or for the payment or prepayment in full of,
all Senior Indebtedness and all claims relating thereto.



Section 5.06. Notice by Company.




     The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the
Company that would cause a payment of any Obligations with respect to the Notes to violate this
Article 5, but failure to give such notice shall not affect the subordination of the Notes to the
Senior Indebtedness as provided in this Article 5.



Section 5.07. Subrogation.




     Subject to the payment in full of all Senior Indebtedness, the rights of the Holders of Notes
will be subrogated to the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness, to the extent of the
application thereto of monies or other assets which would have been received by the Holders of
Notes but for the provisions of this Article 5, until the Notes have been paid in full and no such
subrogation, as between the Company, its creditors other than the holders of Senior Indebtedness,
and the Holders of Notes, will be deemed to be a payment by the Company to or on account of the
holders of Senior Indebtedness.



31









 





Section 5.08. Relative Rights.




     This Article 5 defines the relative rights of Holders of Notes and holders of Senior
Indebtedness. Nothing in this Indenture shall:




     (i) impair, as between the Company and Holders, the obligation of the Company, which is
absolute and unconditional, to pay principal of and interest on the Notes in accordance with
their terms;




     (ii) affect the relative rights of Holders and creditors of the Company other than
their rights in relation to holders of Senior Indebtedness; or




     (iii) prevent the Trustee or any Holder from exercising its available remedies upon a
Default or Event of Default, subject to the rights of holders and owners of Senior
Indebtedness to receive distributions and payments otherwise payable to Holders.



     If the Company fails because of this Article 5 to pay principal of or interest on a Note on
the due date, the failure is still a Default or Event of Default.



Section 5.09. Subordination May Not Be Impaired by Company.




     No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness
evidenced by the Notes shall be impaired by any act or failure to act by the Company or any holder
or by the failure of the Company or any holder to comply with this Indenture.



Section 5.10. Distribution or Notice to Representative.




     Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the
distribution may be made and the notice given to their Representative.



     Upon any payment or distribution of assets of the Company referred to in this Article 5, the
Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the Trustee or to the
Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 5.



Section 5.11. Rights of Trustee and Paying Agent.




     Notwithstanding the provisions of this Article 5 or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the
making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may
continue to make payments on the Notes, unless the Trustee shall have received at its Corporate
Trust Office at least five Business Days prior to the date of such payment written notice of facts
that would cause the payment of any Obligations with respect to the Notes to




32












 




violate this Article 5. Only the Company or a Representative may give the notice. Nothing in
this Article 5 shall impair the claims of, or payments to, the Trustee under or pursuant to Section
9.07 hereof.




     The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same
rights it would have if it were not Trustee. Any Agent may do the same with like rights.



Section 5.12. Authorization to Effect Subordination.




     Each Holder of Notes by its acceptance thereof authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge and effectuate the
subordination of the Notes as provided for in this Article 5 and appoints the Trustee as
attorney-in-fact for any and all such purposes. Forthwith upon the request of any Holder of Senior
Indebtedness or its representative or the trustee under any Indenture under which any instruments
evidencing Senior Indebtedness may have been issued, the Trustee shall execute and deliver to the
Person making such request such agreements or instruments reasonably acceptable to the Trustee in
favor of the Holders of Senior Indebtedness reflecting the terms of the subordination of the Notes
provided for in this Article 5 and in a form reasonably acceptable to such Holder, representative
or trustee, as applicable.



Section 5.13. Payments of Notes Permitted.




     Nothing contained in this Indenture, or any of the Notes, will upon the happening of any
Default, condition, event or act described in Section 5.03, prevent any payment being made by the
Company or the Trustee in connection with the redemption or repurchase of Notes if: (i) notice of
redemption or repurchase, as applicable, has been given pursuant to
Article 3 or Section 6.08,
respectively, prior to the happening of any such Default, condition, event or act described in
Section 5.03; (ii) notice of such redemption or repurchase, as applicable, is mailed not earlier
than 60 days before the date fixed for such redemption or repurchase; and (iii) prior to the time
of such mailing the Company shall have furnished to the Trustee an Officers’ Certificate as to the
absence of any such Default, condition, event or act described in Section 5.03 and to the effect
that, to the best of the knowledge and belief of the Officers signing such certificate, there is no
reason to expect that any such Default, condition, event or act will exist at the date fixed for
such redemption or repurchase, as applicable, or as a result of such redemption or repurchase.



Section 5.14. Trustee Not Fiduciary for Holders of Senior Indebtedness.




     With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only
such obligations on the part of the Trustee as are specifically set forth in this Article 5, and no
implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness and shall not be liable to any such holders if the Trustee
shall in good faith mistakenly pay over or distribute to (i) Holders or holders of Shares of Common
Stock issued upon conversion of such Notes; (ii) the Company; or (iii) any other Person cash,
property or securities to which any holders of Senior Indebtedness would be entitled by virtue of
this Article 5 or otherwise. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants or



33









 







obligations as are specifically set forth in this Article 5 and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read into this Indenture
against the Trustee.



ARTICLE 6.

COVENANTS




Section 6.01. Payment of Notes.




     The Company shall pay or cause to be paid the principal of and interest on the Notes on the
dates and in the manner provided in the Notes. Principal and interest shall be considered paid on
the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of
11:00 a.m., New York City Time, on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal and interest then due.



     The Company shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate borne by the Notes to the extent lawful; it shall
pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace period) at the same rate
to the extent lawful.



Section 6.02. Maintenance of Office or Agency.




     The Company shall maintain in Minneapolis, MN, a Paying Agent, Conversion Agent, Registrar
and an office or agency (which may be an office of the Trustee or an affiliate of the Trustee or
Registrar) where Notes may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company fails to maintain any
such required office or agency or fails to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office
of the Trustee.



     The Company may also from time to time designate one or more other offices or agencies where
the Notes may be presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in Minneapolis, MN for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the location of any such
other office or agency.



     The Company hereby designates the Corporate Trust Office of the Trustee as one such office or
agency of the Company in accordance with Section 2.03.



34









 





Section 6.03. Reports.




     The Company shall file with the Trustee, within 15 days after it files such annual and
quarterly reports, information, documents and other reports with the SEC, copies of its annual and
quarterly reports and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act (the “SEC
Reports”). If at any time the Company is not subject to Section 13 or 15(d) of the Exchange
Act, the Company shall provide reports containing substantially the same information as that
contained in the SEC Reports (the “Trustee Reports”), such reports to be provided at the
same times the Company would have been required to provide the SEC Reports to the Trustee pursuant
to the immediately preceding sentence had it then been subject to section 13 or 15(d) of the
Exchange Act, provided that the Trustee Reports need not include any certifications from officers
of the Company. The Company also shall comply with the other provisions of TIA Section 314(a). The Trustee has no duty
or obligation to verify the accuracy or investigate the content of any such reports, information or document. The
Trustee’s receipt of the reports under this Section 6.03 is for informational purposes only and the Trustee will not
be deemed to have notice, actual or constructive, of such reports, information or document by receipt thereof.



Section 6.04. Compliance Certificate.




     (a) The Company shall deliver
to the Trustee, within 90 days after the end of each fiscal
year, commencing with the fiscal year ending December 31, 2009, an Officers’ Certificate stating
that a review of the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that, in their capacities as
Officers, to the best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in Default in the
performance or observance of any of the terms, provisions and conditions of this Indenture (or, if
a Default or Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is taking or proposes to
take with respect thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of or interest, if
any, on the Notes is prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.



     (b) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee,
forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers’
Certificate specifying such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto.



Section 6.05. Taxes.




     The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency,
all material taxes, assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the Board of Directors shall determine that the failure to
effect such payment is not materially adverse to the Holders of the Notes.



35









 





Section 6.06. Stay, Extension and Usury Laws.




     The Company covenants (to the extent that it may lawfully do so) that it shall not at any time
insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any
stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.



Section 6.07. Corporate Existence.




     Subject to Article 7 hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its corporate existence or status, and the
corporate, partnership or other existence of each of its Significant Subsidiaries, in accordance
with the respective organizational documents (as the same may be amended from time to time) of the
Company or any such Significant Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not
be required to preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to
the Holders of the Notes.



Section 6.08. Offer to Repurchase Upon Change in Control.




     (a) Upon the occurrence of a Change in Control, the Company shall make an offer (a “Change
in Control Offer”) to each Holder to repurchase all or any part (equal to $1,000 or an integral
multiple of $1.00 in excess thereof) of each Holder’s Notes at a purchase price equal to 100% of the aggregate
principal amount thereof plus accrued and unpaid interest to, but excluding, the date of purchase
(the “Change in Control Payment”). Within 10 Business Days following any Change in Control,
the Company shall mail a notice to the Trustee and to each Holder stating:




     (1) that the Change in Control Offer is being made pursuant to this
Section 6.08 and that all Notes tendered will be accepted for payment;




     (2) the purchase price and the purchase date, which shall be no later
than 30 Business Days after the occurrence of a Change in Control (the
“Change in Control Payment Date”);




     (3) that any Note not tendered will continue to accrue interest;




     (4) the name and address of each Paying Agent and Conversion Agent;




     (5) the Conversion Price and any adjustments thereto and information
concerning the Holder’s right to convert the Notes;



36









 






     (6) that, unless the Company defaults in the payment of the Change in
Control Payment, all Notes accepted for payment pursuant to the Change in
Control Offer shall cease to accrue interest after the Change in Control
Payment Date;




     (7) that Holders electing to have any Notes purchased pursuant to a
Change in Control Offer will be required to surrender the Notes, with the
form entitled “Option of Holder to Elect Purchase” on the reverse of the
Notes completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day preceding the Change in
Control Payment Date;




     (8) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the Business
Day preceding the Change in Control Payment Date, facsimile transmission,
letter or any other written form setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing its Change in Control Payment Notice;




     (9) that Notes as to which a Change in Control Payment Notice has been
given may be converted into Shares of Common Stock pursuant to this Section
6.08 only to the extent that any Change in Control Payment Notice given by
the Holder has been withdrawn in accordance with the terms of this
Indenture; and




     (10) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple of $1.00 in excess thereof.



     The Company shall comply with the requirements of Rule 13e-4 and Rule 14e-1 under the Exchange
Act, file a Schedule TO or any successor or similar schedule, if required, under the Exchange Act
and comply with any other federal, state and other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the repurchase of Notes in
connection with a Change in Control.



     A “Change in Control” shall be deemed to have occurred if any of the following occurs
after the date hereof:




     (i) any “person” or “group” (as such terms are defined below) is or
becomes the “beneficial owner” (as defined below), directly or indirectly of shares
of Voting Stock of the Company representing 50% or more of the total voting power of all
outstanding classes of Voting Stock of the Company or has the power, directly or indirectly,
to elect a majority of the members of the Board of Directors of the Company;




     (ii) during any consecutive two-year period, individuals who at the beginning of that
two-year period constituted the Company’s Board of Directors (together with any



37









 







new trustees whose election to the Company’s Board of Directors, or whose nomination
for election by the Company’s shareholders, was approved by a vote of a majority of the
trustees who were either trustees at the beginning of such period or whose election or
nomination for election was approved by the Board of Directors or nominating committee
thereof, the majority of the members of which meet the above criteria) cease for any reason
to constitute a majority of the Company’s Board of Directors then in office;




     (iii) the Company consolidates with, or merges with or into, another Person or the
Company sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of the assets of the Company, or any Person consolidates with, or merges
with or into, the Company, in any such event other than pursuant to a transaction in which
the Persons that “beneficially owned” (as defined below), directly or indirectly, shares of
Voting Stock of the Company immediately prior to such transaction “beneficially own” (as
defined below), directly or indirectly, shares of Voting Stock of the Company representing
at least a majority of the total voting power of all outstanding classes of Voting Stock of
the surviving or transferee Person; or




     (iv) holders of the Capital Stock of the Company approve any plan or proposal for the
liquidation or dissolution of the Company (whether or not otherwise in compliance with this
Indenture).




A Change in Control shall not be deemed to have occurred if:




     (i) the Closing Sale Price of Shares of Common Stock for any five Trading Days during
the ten Trading Days immediately preceding the consummation of the Change in Control is at
least equal to 105% of the Conversion Price in effect on such day; or




     (ii) in the case of a merger or consolidation, all of the consideration (excluding cash
payments for fractional shares and cash payments pursuant to dissenters’ appraisal rights)
in the merger or consolidation constituting the Change in Control consists of common stock
traded on a United States national securities exchange or on the Toronto Stock Exchange, or
any successor thereto (or which will be so traded or quoted when issued or exchanged in
connection with such change in control) and as a result of such transaction or transactions
the Notes become convertible solely into such common stock.



     For the purpose of the definition of “Change in Control”, (i) “person” and
“group” have the meanings given such terms under Section 13(d) and 14(d) of the Exchange
Act or any successor provision to either of the foregoing, and the term “group” includes
any group acting for the purpose of acquiring, holding or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act or any successor provision thereto, (ii) a
“beneficial owner” shall be determined in accordance with Rule 13d-3 under the Exchange
Act, as in effect on the date of this Indenture, except that the number of shares of Voting Stock
of the Company shall be deemed to include, in addition to all outstanding shares of Voting Stock of
the Company and Unissued Shares (as defined below) deemed to be held by the “person” or
“group” (as such terms are defined above) or other Person with respect to which the Change
in Control determination is



38









 







being made, all unissued shares deemed to be held by all other Persons, and (iii) the terms
“beneficially owned” and “beneficially own” shall have meanings correlative to that
of “beneficial owner”. The term “unissued shares” means shares of Voting Stock not
outstanding that are subject to options, warrants, rights to purchase or conversion privileges
exercisable within 60 days of the date of determination of a Change in Control, including the
Shares of Common Stock issuable upon conversion of the Notes.



     (b) A Holder may exercise
its rights pursuant to this Section 6.08 upon delivery of a written
notice (which shall be in substantially the form entitled “Option of Holder to Elect Purchase” on
the reverse of the Notes and which may be delivered by letter, overnight courier, hand delivery,
facsimile transmission or in any other written form and, in the case of Global Notes, may be
delivered electronically or by other means in accordance with the Depositary’s customary
procedures) of the exercise of such rights (a “Change in Control Payment Notice”) to any
Paying Agent at any time prior to the close of business on the Business Day next preceding the
Change in Control Payment Date.



     Notwithstanding anything herein to the contrary, any Holder delivering to a Paying Agent the
Change in Control Payment Notice contemplated by this Section 6.08(b) shall have the right to
withdraw such Change in Control Payment Notice in whole or in a portion thereof that is a principal
amount of $1,000 or in an integral multiple of $1.00 in excess thereof at any time prior to the close of business on
the Business Day next preceding the Change in Control Payment Date by delivery of a written notice
of withdrawal to the Paying Agent in accordance with Section 6.08(a) hereof.



     Upon receipt by any Paying Agent of the Change in Control Payment Notice specified in this
Section 6.08(b), the Holder of the Note in respect of which such Change in Control Payment Notice
was given shall (unless such Change in Control Payment Notice is withdrawn as specified herein)
thereafter be entitled to receive the Change in Control Payment with respect to such Note. Such
Change in Control Payment shall be paid to such Holder promptly following the later of (i) the
Change in Control Payment Date with respect to such Note (provided the conditions in this Section
6.08(b) have been satisfied) and (ii) the time of delivery of such Note to a Paying Agent by the
Holder thereof in the manner required by this Section 6.08(b). Notes in respect of which a Change
in Control Payment Notice has been given by the Holder thereof may not be converted into Shares of
Common Stock on or after the date of the delivery of such Change in Control Payment Notice unless
such Change in Control Payment Notice has first been validly withdrawn.



     (c) No later than 12:30 p.m. New York City time, on the Change in Control Payment Date, the
Company shall, to the extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change in Control Offer, (2) deposit with the Paying Agent an amount equal
to the Change in Control Payment in respect of all Notes or portions thereof so tendered and (3)
deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’
Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder of Notes so tendered the Change
in Control Payment, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided that each such new Note shall be
in a principal amount of $1,000 or an integral multiple of $1.00 in excess thereof.



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The Company shall publicly announce the results of the Change in Control Offer on or as soon
as practicable after the Change in Control Payment Date.




     If a Paying Agent holds, in accordance with the terms hereof, money sufficient to pay the
Change in Control Payment of any Note for which a Change in Control Payment Notice has been
tendered and not withdrawn in accordance with this Indenture then, on the Change in Control Payment
Date, such Note will cease to be outstanding and the rights of the Holder in respect thereof shall
terminate (other than the right to receive the Change in Control Payment as aforesaid).



     (d) Notwithstanding anything
to the contrary in this Section 6.08, the Company shall not be
required to make a Change in Control Offer upon a Change in Control if a third party makes the
Change in Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 6.08 hereof and all other provisions of this Indenture
applicable to a Change in Control Offer made by the Company and purchases all Notes validly
tendered and not withdrawn under such Change in Control Offer.



     (e) Notwithstanding anything
to the contrary in this Section 6.08, the Company shall not be
required to make a Change in Control Offer upon a Change in Control if payment on the Notes is
prohibited pursuant to the subordination provisions of Section 5 above.



Section 6.09. Limitation on Incurrence of Senior Indebtedness




     The Company shall not, directly or indirectly, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or otherwise, with respect to any
Senior Indebtedness, except:



     (1) Indebtedness that is outstanding on the date of this Indenture;



     (2) Hedging Obligations;



     (3) additional Senior Indebtedness in aggregate principal amount (or accreted value, if
applicable) at any time outstanding not exceeding €15 million;



     (4) Indebtedness incurred in connection with the acquisition of assets, businesses or
operations which are in, or related, ancillary or complementary to, the pulp, paper, solid wood or
forest products business;



     (5) Indebtedness incurred to refund, refinance or replace any Senior Indebtedness or any
indebtedness of any Subsidiary outstanding on the date of this Indenture or incurred pursuant to
loan or credit agreements in effect on the date of this Indenture and any further refinancings
thereof;



     (6) guarantees of Indebtedness or other obligations or liabilities of the Company’s
Subsidiaries;



     No Subsidiary of the Company established after the date of this Indenture may incur
Indebtedness (other than guarantees of Senior Indebtedness of the Company permitted to be



40









 







incurred under the Indenture) unless such Subsidiary is primarily engaged in a business other
than investing in securities of the Company or any of its Subsidiaries. Except as provided in the
preceding sentence, this Indenture does not limit the ability of any Subsidiary of the Company to
incur Indebtedness at any time.



Section 6.10. Limitation on Liens.




     The Company shall not create, incur, assume or otherwise cause or suffer to exist or become
effective any lien of any kind (other than Permitted Liens) upon any of the Company’s property or
assets, now owned or hereafter acquired (including shares of any Subsidiary of the Company), unless
all payments due under this Indenture and the Notes are secured on an equal and ratable basis with
the obligations so secured until such time as such obligations are no longer secured by a lien.
Nothing in this Section 6.10 shall prevent any Subsidiary of the Company from granting a Lien on
any of its assets.



     The term “Permitted Liens” means:




     (i) liens securing Senior Indebtedness permitted by this Indenture to be incurred;




     (ii) liens securing purchase money obligations incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of property,
plant or equipment used in the business of the Company or any Subsidiary of the Company;




     (iii) liens securing debt incurred or assumed in connection with the acquisition of
other assets, businesses and operations permitted by the terms of this Indenture;




     (iv) liens in favor of the Company;




     (v) liens on property of a person existing at the time such person is merged with or
into or consolidated with the Company; provided that such liens were not incurred in
contemplation of such merger or consolidation and do not extend to any assets other than
those of the person merged into or consolidated with the Company;




     (vi) liens securing Hedging Obligations, provided that such Hedging Obligations are
permitted under this Indenture;




     (vii) liens on property existing at the time of acquisition of the property by the
Company, provided that such liens were not incurred in contemplation of such acquisition;




     (viii) liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature;




     (ix) liens existing on the date of this Indenture;



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     (x) liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other appropriate
provision as is required in conformity with GAAP has been made therefore;




     (xi) liens arising out of judgments or awards arising from legal proceedings being
contested in good faith by appropriate proceedings and execution thereof is stayed;




     (xii) liens imposed by law, such as carriers’, warehousemen’s, landlord’s and
mechanics’ liens, in each case for sums not yet due or being contested in good faith by
appropriate proceedings;




     (xiii) other liens incurred in the ordinary course of business of the Company with
respect to obligations that do not exceed €4 million at any one time outstanding; and




     (xiv) any extension, renewal or replacement, in whole or part, or any permitted lien
described above, provided that any such lien so extended, renewed or replaced shall not
extend to other property of the Company other than such item of property covered by such
lien or by improvement thereon or additions or accessions thereto.



Section 6.11. Prohibition on Incurrence of Senior Subordinated Debt.




     The Company shall not incur, create, issue, assume or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness of the
Company and senior in any respect in right of payment to the Notes.



ARTICLE 7.

SUCCESSORS




Section 7.01. Merger, Consolidation, or Sale of Assets.




     The Company shall not, directly or indirectly, consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all its properties or assets as a whole in one or more
related transactions to, another Person unless (i) the Company is the surviving corporation or the
Person formed by or surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition has been made is a
corporation organized or existing under the laws of the United States, any state of the United
States, or the District of Columbia, or Canada, or any province or territory of Canada, (ii) the
Person formed by or surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, lease, conveyance or other disposition has been
made assumes all the Obligations of the Company under the Notes and this Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, (iii) immediately after
giving effect to such transaction, no Default or Event of Default has occurred and is continuing;
and (iv) the Company or the surviving corporation, as the case may be, has delivered to the Trustee
an Officers’ Certificate and an Opinion of Counsel, each stating that such merger, consolidation,
sale, assignment, transfer, lease, conveyance, transfer or other



42









 




dispositions comply with this Article 7 and that all conditions precedent herein provided for
relating to such transaction have been satisfied.




Section 7.02. Successor Corporation Substituted.




     Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all the assets of the Company in accordance with Section
7.01 hereof, the successor corporation formed by such consolidation or into or with which the
Company is merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the
provisions of this Indenture referring to the “Company” shall refer instead to the successor
corporation and not to the Company), and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person had been named as the Company
herein; provided, however, that the Company shall not be discharged from the obligations it may
have under a supplemental indenture pursuant to Section 4.12; provided further, the Company shall
not be relieved from the obligation to pay the principal, premium, if any, and interest on the
Notes except in the case of a sale, assignment, transfer, lease, conveyance or other disposition of
all or substantially all the Company’s assets that meets the requirements of Section 7.01 hereof.



ARTICLE 8.

DEFAULTS AND REMEDIES




Section 8.01. Events of Default.




     An “Event of Default” occurs if:



     (a) the Company fails to pay principal on any Note when due, whether or not prohibited by the
subordination provisions in Section 5 hereof;



     (b) the Company fails to pay any interest on any Note when due if such failure continues for
30 days, whether or not prohibited by the subordination provisions of Section 5 hereof;



     (c) the Company fails to perform any other agreement required of the Company in this Indenture
if such failure continues for 60 days after notice is given in accordance with this Indenture;



     (d) the Company fails to pay the purchase price of any Note when due, whether or not
prohibited by the subordination provisions of Section 5 hereof;



     (e) the Company fails to provide timely notice of a Change in Control if such failure
continues for 30 days after such Change in Control;



     (f) any Indebtedness for money borrowed by the Company or one of the Company’s Significant
Subsidiaries (all or substantially all of the outstanding Voting Stock of which are owned, directly
or indirectly, by the Company) in an aggregate outstanding principal amount in



43









 







excess of €10.0 million is not paid at final maturity or upon acceleration and such
Indebtedness is not discharged, or such acceleration is not cured or rescinded, within 30 days
after written notice as provided in this Indenture; and



     (g) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:




     (i) is for relief against the Company or one of the Company’s Significant Subsidiaries
in an involuntary case;




     (ii) appoints a custodian of the Company or one of the Company’s Significant
Subsidiaries or for all or substantially all of the property of the Company; or




     (iii) orders the liquidation of the Company or one of the Company’s Significant
Subsidiaries;


and the order or decree remains unstayed and in effect for 60 consecutive days.




Section 8.02. Acceleration.




     If any Event of Default (other than an Event of Default specified in clause (g) of Section
8.01 hereof) with respect to the Company occurs and is continuing, the Trustee or the Holders of at
least 25% in aggregate principal amount of the then outstanding Notes may declare the principal
amount of the Notes to be due and payable immediately. Upon any such declaration, the Notes shall
become due and payable immediately. Notwithstanding the foregoing, if an Event of Default
specified in clause (g) of Section 8.01 hereof occurs with respect to the Company, all outstanding
Notes shall be due and payable immediately without further action or notice. Any payment by the
Company on the Notes following any such acceleration will be subject to the subordination
provisions of Article 5 hereof. Before a judgment or decree is entered based on such acceleration,
the Holders of a majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if all existing Events of Default (except nonpayment of principal that has become due
solely because of the acceleration) have been cured or waived.



Section 8.03. Other Remedies.




     If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.



     The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.



44









 





Section 8.04. Waiver of Past Defaults.




     Subject to Section 8.02, Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the
Notes waive an existing Default or Event of Default and its consequences hereunder, except a
continuing Default or Event of Default in the payment of the principal of, premium, if any, or
interest on, the Notes (including in connection with an offer to purchase) or a failure by the
Company to convert any Notes into Shares of Common Stock in accordance with the provisions of the
Notes and Article 4 of this Indenture, or a failure to comply with any of the provisions of this
Indenture that would require the consent of the Holder of each outstanding Note affected to waive
such failure (provided, however, that the Holders of a majority in aggregate principal amount of
the then outstanding Notes may rescind an acceleration and its consequences, including any related
payment Default that resulted from such acceleration). Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.



Section 8.05. Control by Majority.




     Subject to the Trustee’s duties in the case of an Event of Default, the Trustee will not be
obligated to exercise any of its rights or powers at the request of the Holders, unless the Holders
have offered to the Trustee indemnity reasonably satisfactory to the Trustee. Subject
to this Indenture, applicable law and the Trustee’s indemnification, the Holders of a majority in
aggregate principal amount of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it with respect to the Notes. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in
personal liability.



Section 8.06. Limitation on Suits.




     A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if:



     (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default;



     (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a
written request to the Trustee to pursue the remedy;



     (c) such Holder of a Note or Holders of Notes , provide to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense resulting from instituting such
proceeding as Trustee;



     (d) the Trustee does not comply with the request within 60 days after receipt of the request
and the offer and, if requested, the provision of indemnity; and



45









 





     (e) during such 60-day period the Holders of a majority in aggregate principal amount of the
then outstanding Notes did not give the Trustee a direction inconsistent with the request.



     A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a
Note or to obtain a preference or priority over another Holder of a Note.



Section 8.07. Rights of Holders of Notes to Receive Payment.




     Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal, premium, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer to purchase), to convert
such Note in accordance with Article 4 or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the consent of such
Holder.



Section 8.08. Collection Suit by Trustee.




     If an Event of Default specified in Section 8.01(a) or (b) occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount of principal of, premium, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel.



Section 8.09. Trustee May File Proofs of Claim.




     The Trustee is authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall be entitled and
empowered to collect, receive and distribute any money or other property payable or deliverable on
any such claims and any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 9.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 9.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall be secured by a lien
on, and shall be paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization,



46









 







arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.



Section 8.10. Priorities.




     If the Trustee collects any money pursuant to this Article, subject to Article 5 of this
Indenture, it shall pay out the money in the following order:




     First: to the Trustee, its agents and attorneys for amounts due under Section 9.07
hereof, including payment of all compensation, expense and liabilities incurred, and all
advances made, by the Trustee and the costs and expenses of collection;




     Second: to Holders of Notes for amounts due and unpaid on the Notes for principal,
premium, if any, and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal, premium, if any, and
interest, respectively; and




     Third: to the Company or to such party as a court of competent jurisdiction shall
direct.



     The Trustee may fix a record date and payment date for any payment to Holders of Notes
pursuant to this Section 8.10.



Section 8.11. Undertaking for Costs.




     In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder of a Note pursuant to Section 8.07 hereof, or a suit by Holders of more
than 10% in aggregate principal amount of the then outstanding Notes.



ARTICLE 9.

TRUSTEE




Section 9.01. Duties of Trustee.




     (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of care and skill in
its exercise, as a prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs.



     (b) Except during the continuance of an Event of Default:




     (i) the duties of the Trustee shall be determined solely by the express provisions of
this Indenture and the Trustee need perform only those duties that are



47









 







specifically set forth in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and




     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated therein).



     (c) The Trustee may not be relieved from liabilities for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:




     (i) this paragraph does not limit the effect of paragraph (b) of this Section;




     (ii) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and




     (iii) the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received pursuant to Section 8.05 hereof.



     (d) Whether or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section.



     (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and
powers under this Indenture at the request of any Holders, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss, liability or expense.



     (f) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.



Section 9.02. Rights of Trustee.




     (a) The Trustee may conclusively rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of Indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by the proper party or
parties. The Trustee shall not be bound to make any inquiry or investigation into the matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of Indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or



48









 







investigation into such facts or matters as it may see fit, and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation.



     (b) Before the Trustee acts or refrains from acting, it shall receive an Officers’
Certificate and an Opinion of Counsel . The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The
Trustee may consult with counsel of its choice and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.



     (c) The Trustee may act and rely and shall be protected in acting and relying in good faith on
the opinion or advice of, or information obtained from, any counsel, accountant, appraiser or other
expert or adviser, whether retained or employed by the Company or by the Trustee, in relation to
any matter arising in the administration of the trusts hereof.



     (d) The Trustee shall not be liable for any action it takes or omits to take in good faith
that it reasonably believes to be authorized or within the rights or powers conferred upon it by
this Indenture.



     (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Company shall be sufficient if evidenced by a Company Request or Company Order.



     (f) The Trustee shall not be charged with knowledge of any Default or Event of Default with
respect to the Notes unless either (1) a Responsible Officer shall have actual knowledge of such
Default or Event of Default or (2) written notice of such Default or Event of Default shall have
been received by the Trustee from the Company or from any Holder of the Notes, and such notice
references the Notes and this Indenture.



     (g) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.



     (h) The rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and
other Person employed to act hereunder.



     (i) The Trustee may request that the Company deliver an Officers’ Certificate setting forth
the names of individuals and/or titles of Officers authorized at such time to take specified
actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person
authorized to sign an Officers’ Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.



     (j) Notwithstanding anything in this Indenture, in no event shall the Trustee, the Paying
Agent, the Conversion Agent or the Registrar be liable under or in connection with this



49









 







Indenture for indirect, special, incidental, punitive or consequential losses or damages of
any kind whatsoever, including but not limited to lost profits, whether or not foreseeable, even if
the Trustee, the Paying Agent, the Conversion Agent or the Registrar has been advised of the
possibility thereof and regardless of the form of action in which such damages are sought; provided
that the Paying Agent, the Conversion Agent or the Registrar is not the Company or any of its
Subsidiaries.



Section 9.03. Individual Rights of Trustee.




     The Trustee in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Company or any Affiliate of the Company with the same rights it
would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee
is also subject to Sections 9.10 and 9.11 hereof.



Section 9.04. Trustee’s Disclaimer.




     The Trustee shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the
proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any
provision of this Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document in connection with
the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.



Section 9.05. Notice of Defaults.




     If a Default or Event of Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90
days after it occurs. Except in the case of a Default or Event of Default in payment of principal
of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as
a committee of its Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.



Section 9.06. Reports by Trustee to Holders of the Notes.




     Within 60 days after each June 15 beginning with the June 15 following the date of this
Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of
the Notes a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no
event described in TIA § 313(a) has occurred within the 12 months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA § 313(b)(2). The Trustee
shall also transmit by mail all reports as required by TIA § 313(c).



     A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to
the Company and filed with the SEC and each stock exchange on which the Notes are listed in
accordance with TIA § 313(d). The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange.



50









 





Section 9.07. Compensation and Indemnity.




     The Company shall pay to the Trustee from time to time reasonable compensation for its
acceptance of this Indenture and services hereunder. The Trustee’s compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company shall reimburse
the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.



     The Company shall indemnify the Trustee and its officers, directors, employees and agents
against any and all losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company (including this Section 9.07) and
defending itself against any claim (whether asserted by the Company or any Holder or any other
Person) or liability in connection with the exercise or performance of any of its powers or duties
hereunder, including, without limitation, in connection with any losses, liabilities or expenses that may result from the
transfer, exchange or assignment of such Holder’s Notes in violation of any provision of this Indenture and/or
applicable United States Federal or state securities law, except to the extent any such loss, liability or expense may be
attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company
of its Obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee shall have the right to employ separate counsel in any and all actions
or proceedings arising out of or in connection with the acceptance or administration of its duties
under this Indenture and participate in the investigation and defense thereof, and the Company
shall pay the reasonable fees and expenses of such separate counsel; provided, however, that the
Trustee may only employ separate counsel at the expense of the Company if in the reasonable
judgment of the Trustee (i) a conflict of interest exists by reason of common representation or
(ii) there are legal defenses available to the Trustee that are different from or are in addition
to those available to the Company or if all parties commonly represented do not agree as to the
action (or inaction) of counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.



     The Obligations of the Company under this Section 9.07 shall survive the resignation or
removal of the Trustee and the satisfaction and discharge of this Indenture.



     To secure the Company’s payment Obligations in this Section, the Trustee shall have a lien
prior to the Notes on all money or property held or collected by the Trustee, except that held in
trust to pay principal and interest on particular Notes. Such lien shall survive the satisfaction
and discharge of this Indenture.



     When the Trustee incurs expenses or renders services after an Event of Default specified in
Section 8.01(g) hereof occurs, the expenses and the compensation for the services (including the
fees and expenses of its agents and counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.



     The Trustee shall comply with the provisions of TIA § 313(b)(2) to the extent applicable.



51









 





Section 9.08. Replacement of Trustee.




     A resignation or removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.



     The Trustee may resign in writing at any time and be discharged from the trust hereby created
by so notifying the Company. The Holders of a majority in principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company
may remove the Trustee if:



     (a) the Trustee fails to comply with Section 9.10 hereof;



     (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with
respect to the Trustee under any Bankruptcy Law;



     (c) a custodian or public officer takes charge of the Trustee or its property; or



     (d) the Trustee becomes incapable of acting.



     If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Company shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the
Company.



     If a successor Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in aggregate
principal amount of the then outstanding Notes may petition any court of competent jurisdiction for
the appointment of a successor Trustee.



     If the Trustee, after written request by any Holder who has been a Holder for at least six
months, fails to comply with Section 9.10, such Holder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.



     A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to
the lien provided for in Section 9.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 9.08, the Company’s obligations under Section 9.07 hereof shall continue for the
benefit of the retiring Trustee.



52









 





Section 9.09. Successor Trustee by Merger, etc.




     Any corporation or association into which the Trustee may be merged or converted, or with
which it may be consolidated, or to which it may sell or transfer its corporate trust business and
assets as a whole or substantially as a whole, or any corporation or association resulting from any
such merger, conversion, sale, transfer or consolidation to which it shall be a party, shall be and
become successor Trustee hereunder and vested with all of the title to the Trust Estate, and all
the trusts, powers, discretion, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.



Section 9.10. Eligibility; Disqualification.




     There shall at all times be a Trustee hereunder that is a corporation organized and doing
business under the laws of the United States of America or of any state thereof that is authorized
under such laws to exercise corporate trustee power, that is subject to supervision or examination
by federal or state authorities and that has a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition.



     This Indenture shall always have a Trustee who satisfies the requirements of
TIA § 310(a)(1),
(2) and (5). The Trustee is subject to 
TIA § 310(b).



Section 9.11. Preferential Collection of Claims Against Company.




     The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA §
311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent
indicated therein.



ARTICLE 10.

SATISFACTION AND DISCHARGE




Section 10.01. Satisfaction and Discharge.




     This Indenture will be discharged and will cease to be of further effect as to all Notes
issued hereunder, when:




	(1)	 	either:






	 	(a)	 	all outstanding Notes have or will become due and payable at their scheduled
maturity, within one year; or
	 
	 	(b)	 	all outstanding Notes that are scheduled for cancellation have become due and
payable by reason of the making of a notice of redemption or otherwise or will become
due and payable within one year;






and the Company has irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars,
non-callable



53









 







Government Securities, or a combination thereof, in such amounts as will be sufficient
without consideration of any reinvestment of interest, to pay and discharge the entire
Indebtedness on the Notes not delivered to the Trustee for cancellation for principal,
premium, if any, and accrued interest to the date of maturity or redemption; provided,
however, that the foregoing shall not discharge the Company’s obligation to effect
conversion, registration of transfer or exchange of securities in accordance with the terms
of this Indenture;




	(2)	 	no Default or Event of Default shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will not result in a
breach or violation of, or constitute a Default under, any other instrument to which the
Company is a party or by which the Company is bound;






	(3)	 	the Company has paid or caused to be paid all sums payable by it under this Indenture; and






	(4)	 	the Company has delivered irrevocable instructions to the Trustee under this Indenture to
apply the deposited money toward the payment of the Notes at maturity or the redemption date,
as the case may be.




In addition, the Company must deliver an Officers’ Certificate and an Opinion of Counsel to the
Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.




     Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been
deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section, the provisions
of Section 10.02 and of Article 4 shall survive.



Section 10.02. Application of Trust Money; Reinstatement.




     All money deposited with the Trustee pursuant to Section 10.01 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the Trustee; but such money
need not be segregated from other funds except to the extent required by law.



     If the Trustee or Paying Agent is unable to apply any money or Government Securities in
accordance with Section 10.01 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.01 until such time as the
Trustee or such Paying Agent is permitted to apply all such money in accordance with Section 10.01;
provided that if the Company has made any payment of principal of, premium, if any, or interest on
any Notes because of the reinstatement of its Obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or Government Securities
held by the Trustee or Paying Agent.



54









 





Section 10.03. Repayment to Company.




     The Trustee and each Paying Agent shall promptly pay to the Company upon request any excess
money (i) deposited with them pursuant to Section 10.01 and (ii) held by them at any time.



     The Trustee and each Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal or interest that remains unclaimed for two years after a right to such
money has matured; provided, however, that the Trustee or such Paying Agent, before being required
to make any such payment, may at the expense of the Company cause to be mailed to each Holder
entitled to such money notice that such money remains unclaimed and that after a date specified
therein, which shall be at least 30 days from the date of such mailing, any unclaimed balance of
such money then remaining will be repaid to the Company. After payment to the Company, Holders
entitled to money must look to the Company for payment as general creditors.



ARTICLE 11.

AMENDMENT, SUPPLEMENT AND WAIVER




Section 11.01. Without Consent of Holders of Notes.




     The Company and the Trustee may amend or supplement this Indenture or the Notes without the
consent of any Holder of a Note:



     (a) to cure any ambiguity, defect or inconsistency or make any other change that does not, in
the good faith opinion of the Board of Directors and the Trustee, adversely affect the rights of
any Holders of Notes in any material respect;



     (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to
alter the provisions of Article 2 hereof (including the related definitions) in a manner that does
not materially adversely affect any Holder;



     (c) to provide for the assumption of the Company’s Obligations to the Holders of the Notes by
a successor to the Company pursuant to Article 7 hereof;



     (d) to make any change that
would provide any additional rights or benefits to the Holders of
the Notes or that does not, in the good faith opinion of the Board of Directors of the Company, adversely affect the legal rights hereunder of any Holder of the Note in any material
respect;



     (e) to comply with requirements of the SEC in order to effect or maintain the qualification of
this Indenture under the TIA;



     (f) pursuant to Section 4.14 hereof.



     Upon the request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and upon receipt by the
Trustee of the documents described in Section 9.02 hereof, the Trustee shall join with the



55









 







Company in the execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into such amended or
supplemental indenture that affects its own rights, duties or immunities under this Indenture or
otherwise.



Section 11.02. With Consent of Holders of Notes.




     Except as provided below in this Section 11.02, the Company and the Trustee may amend or
supplement this Indenture and the Notes with the consent of the Holders of at least a majority in
aggregate principal amount of the Notes then outstanding voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 8.04 and 8.07 hereof, any existing Default or Event of Default
(other than a Default or Event of Default in the payment of the principal of, premium, if any, or
interest on the Notes, except a payment Default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the
consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes
voting as a single class (including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes). Sections 2.08 and 2.09 hereof shall determine which Notes
are considered to be “outstanding” for purposes of this Section 11.02.



     Upon the request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and upon the filing with
the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section 9.02 hereof, the
Trustee shall join with the Company in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental indenture.



     It shall not be necessary for the consent of the Holders of Notes under this Section 11.02 to
approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such
consent approves the substance thereof.



     After an amendment, supplement or waiver under this Section becomes effective, the Company
shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such amended or supplemental
indenture or waiver. Subject to Sections 8.04 and 8.07 hereof, the Holders of a majority in
aggregate principal amount of the Notes then outstanding voting as a single class may waive
compliance in a particular instance by the Company with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or waiver under this
Section 11.02 may not (with respect to any Notes held by a non-consenting Holder):



     (a) change the stated maturity of the principal of, or interest on, any Note;



56









 





     (b) reduce the principal amount of or any interest on any Note;



     (c) reduce the amount of principal payable upon acceleration of the maturity of any Note;



     (d) change the place or currency of payment of principal of, or any interest on, any Note;



     (e) impair the right to institute suit for the enforcement of any payment on, or with respect
to, any Note;



     (f) modify the provisions with respect to the purchase right of the Holders upon a Change in
Control in a manner adverse to Holders;



     (g) modify the subordination provisions in Article 5 hereof in a manner materially adverse to
the Holders of Notes;



     (h) adversely affect the right of Holders to convert Notes pursuant to Article 4 hereof other
than as provided in this Indenture;



     (i) reduce the percentage in principal amount of outstanding Notes required for modification
or amendment of this Indenture provided for in this Article 11;



     (j) reduce the percentage in principal amount of outstanding Notes necessary for waiver of
compliance set forth in Section 8.04 and Section 8.07; or



     (k) modify provisions with respect to Section 11.02 hereof, except to increase the percentage
required for modification or waiver or to provide for consent of each affected Holder of the Notes.



Section 11.03. Compliance with Trust Indenture Act.




     Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended
or supplemental indenture that complies with the TIA as then in effect.



Section 11.04. Revocation and Effect of Consents.




     Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a
Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of
the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written notice of revocation
before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds every Holder.




57











 





Section 11.05. Notation on or Exchange of Notes.




     The Trustee may place an appropriate notation about an amendment, supplement or waiver on any
Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee
shall, upon receipt of a Company Order, authenticate new Notes that reflect the amendment,
supplement or waiver.



     Failure to make the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.



Section 11.06. Trustee to Sign Amendments, etc.




     The Trustee shall sign any amended or supplemental indenture authorized pursuant to this
Article 11 if the amendment or supplement does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. The Company may not sign an amendment or supplemental indenture
until the Board of Directors of the Company approves it. In executing any amended or supplemental
indenture, the Trustee shall receive and (subject to Section 9.01 hereof) shall be fully protected
in relying upon, in addition to the documents required by Section 12.04 hereof, an Officers’
Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture.



ARTICLE 12.

MISCELLANEOUS




Section 12.01. Trust Indenture Act Controls.




     If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by
TIA §318(c), the imposed duties shall control.



Section 12.02. Notices.




     Any notice or communication by the Company or the Trustee to the others is duly given if in
writing and delivered in Person or mailed by first class mail (registered or certified, return
receipt requested), facsimile or overnight air courier guaranteeing next day delivery, to the
others’ address:


If to the Company:



Mercer International Inc.

Suite 2840, 650 West Georgia Street

Vancouver, B.C., Canada V6B 4N8

Attn: David Gandossi, Chief Financial Officer

Facsimile: (604) 684-1094




58









 







With a copy to:



Sangra Moller LLP

1000 Cathedral Place

935 West Georgia Street

Vancouver, BC, Canada V6C 3L2

Attn: Harjit Sangra

Facsimile: (604) 669-8803



If to the Trustee:



Wells Fargo Bank, National Association

707 Wilshire Blvd., 17th Floor

Los Angeles, CA 90017

Mailcode E2818-176

Attn: Corporate Trust Services

Facsimile: (213) 614-3355




     The Company or the Trustee, by notice to the others may designate additional or different
addresses for subsequent notices or communications.



     All notices and communications (other than those sent to Holders) shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing
next day delivery.



     Any notice or communication to a Holder shall be mailed by first class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar, except that notes held in book entry form
may be delivered by electronic transmission. Any notice or communication shall also be so mailed
to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to mail a
notice or communication to a Holder or any defect in it shall not affect its sufficiency with
respect to other Holders.



     If a notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.



     If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee
and each Agent at the same time.



Section 12.03. Communication by Holders of Notes with Other Holders of Notes.




     Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their
rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA § 312(c).



59









 





Section 12.04. Certificate and Opinion as to Conditions Precedent.




     Upon any request or application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:



     (a) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee
(which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion
of the signers, all conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and



     (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which
shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of
such counsel, all such conditions precedent and covenants have been satisfied.



Section 12.05. Statements Required in Certificate or Opinion.




     Each certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply
with the provisions of TIA § 314(e) and shall include:



     (a) a statement that the Person making such certificate or opinion has read such covenant or
condition;



     (b) a brief statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are based;



     (c) a statement that, in the opinion of such Person, he or she has made such examination or
investigation as is necessary to enable such Person to express an informed opinion as to whether or
not such covenant or condition has been satisfied; and



     (d) a statement as to whether or not, in the opinion of such Person, such condition or
covenant has been satisfied.



Section 12.06. Rules by Trustee and Agents.




     The Trustee may make reasonable rules for action by or at a meeting of Holders. The
Registrar, Paying Agent or Conversion Agent may make reasonable rules and set reasonable
requirements for its functions.



Section 12.07. No Personal Liability of Directors, Officers, Employees and Shareholders.




     No past, present or future director, officer, employee, incorporator or shareholder of the
Company, as such, shall have any liability for any Obligations of the Company under the Notes, this
Indenture or for any claim based on, in respect of, or by reason of, such Obligations or their
creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.



60









 





Section 12.08. Governing Law.




     THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE,
THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF THE COMPANY AND
THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE,
THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY.



Section 12.09. No Adverse Interpretation of Other Agreements.




     This Indenture may not be used to interpret any other indenture, loan or debt agreement of the
Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.



Section 12.10. Successors.




     All agreements of the Company in this Indenture and the Notes shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.



Section 12.11. Severability.




     In case any provision in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not in any way be affected or
impaired thereby.



Section 12.12. Counterparts.




     This Indenture may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall constitute one and the same
agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF
transmission shall constitute effective execution and delivery of this Indenture as to the parties
hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the
parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for
all purposes.



Section 12.13. Force Majeure.




     In no event shall the Trustee be responsible or liable for any failure or delay in the
performance of its obligations hereunder arising out of or caused by, directly or indirectly,
forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts
of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of
God, and interruptions, loss or malfunctions of utilities, communications or computer (software and
hardware) services; it being understood that the Trustee shall use reasonable efforts which are



61









 




consistent with accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.




Section 12.14. U.S.A. Patriot Act.




     The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act,
the Trustee, like all financial institutions and in order to help fight the funding of terrorism
and money laundering, is required to obtain, verify, and record information that identifies each
person or legal entity that establishes a relationship or opens an account with the Trustee. The
parties to this Indenture agree that they will provide the Trustee with such information as it may
request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.



Section 12.15. Table of Contents, Headings, etc.




     The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part of
this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.



{signature pages follow}




62









 





SIGNATURES




     IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on
behalf of the respective parties hereto as of the date first above written.



	 	 	 	 	 
	 	 
MERCER INTERNATIONAL INC.

 
 	 
	 	By:  	/s/  Jimmy S.H. Lee 	 
	 	 	Name:  	Jimmy S.H. Lee 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
 
 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION

 
 	 
	 	By:  	/s/  Maddy Hall 	 
	 	 	Name:  	Maddy Hall 	 
	 	 	Title:  	Vice-President 	 



 









 






	 	 	 	 	 



Exhibit A




[FORM OF FACE OF NOTE]




MERCER INTERNATIONAL INC.





     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS
NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED
IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR SECURITIES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]1





 




			
	1	 	This paragraph should be included only if the Note is a
Global Note.




A-1









 










			
	CUSIP/CINS:                     
	 	No.___
	 	 	 





MERCER INTERNATIONAL INC.

8.5% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2012




     Mercer International Inc., a Washington corporation (the “Company”, which term shall
include any successor corporation under the Indenture referred to on the reverse hereof), promises
to pay to                                         , or registered assigns, the principal sum of
                                         Dollars ($                    ) on January 15, 2012 [, or such greater or
lesser amount as is indicated on the Schedule of Exchanges and Interests in the Global Note on the
other side of this Note].2



     Interest Payment Dates: January 15 and July 15, commencing July 15, 2010



     Record Dates: January 1 and July 1



     This Note is convertible as specified on the other side of this Note. Additional provisions of
this Note are set forth on the other side of this Note.



     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.



	 	 	 	 	 
	 	MERCER INTERNATIONAL INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title 	 
	 



Dated:



Trustee’s Certificate of Authentication: This is one of the Notes referred to in the
within-mentioned Indenture.




WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee




	 	 	 
	 

Authorized Signatory

	 	 








 




			
	2	 	This phrase should be included only if the Note is a
Global Note.




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[FORM OF REVERSE SIDE OF NOTE]




MERCER INTERNATIONAL INC.

8.5% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2012




1. INTEREST




     Mercer International Inc., a Washington corporation (the “Company”, which term shall
include any successor corporation under the Indenture hereinafter referred to), promises to pay
interest on the principal amount of this Note at the rate of 8.5% per annum. The Company shall pay
interest semiannually on January 15 and July 15 of each year (each, an “Interest Payment
Date”), commencing July 15, 2010, unless such date is not a Business Day, in which case, the
Company shall pay interest on the next succeeding Business Day and such payment shall be deemed to
have been paid on such Interest Payment Date and no interest shall accrue during the additional
period of time. Interest on the Notes shall accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from •, 2009; provided, however, that if there is
not an existing Default in the payment of interest and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.



2. METHOD OF PAYMENT




     The Company shall pay interest on this Note (except defaulted interest) to the Person who is
the Holder of this Note at the close of business on January 1 or July 1, as the case may be, next
preceding the related Interest Payment Date. The Holder must surrender this Note to a Paying Agent
to collect payment of principal. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and private debts. The
Company may pay principal and interest in respect of any Definitive Note by check or wire payable
in such money; provided, however, that a Holder with an aggregate principal amount in excess of
$1,000,000 will be paid by wire transfer in immediately available funds at the election of such
Holder. The Company may mail an interest check to the Holder’s registered address. Notwithstanding
the foregoing, so long as this Note is registered in the name of a Depositary or its nominee, all
payments hereon shall be made by wire transfer of immediately available funds to the account of the
Depositary or Wells Fargo Bank, National Association.



3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT




     Initially, Wells Fargo Bank, National Association, (the “Trustee,” which term shall include
any successor trustee under the Indenture hereinafter referred to) will act as Paying Agent,
Registrar and Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion
Agent without notice to the Holder. The Company or any of its Subsidiaries may, subject to certain
limitations set forth in this Indenture, act as Paying Agent or Registrar.



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4. INDENTURE, LIMITATIONS




     This Note is the only one of a duly authorized issue of Notes of the Company designated as its
8.5% Convertible Senior Subordinated Notes due 2012 (the “Notes”), issued under an
Indenture dated as of December 10, 2009, (together with any supplemental Indentures thereto, the
“Indenture”), between the Company and the Trustee. The terms of this Note include those
stated in the Indenture and those required by or made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. This Note is
subject to all such terms, and the Holder of this Note is referred to the Indenture and said Act
for a statement of them. In the event of any conflict or inconsistency between this Note and the
Indenture, the Indenture shall conclusively govern resolution thereof for all purposes. All
capitalized terms used but not defined herein shall have the meaning ascribed to such term in the
Indenture.



     The Notes are subordinated unsecured Obligations of the Company limited to $72,500,000
aggregate principal amount, subject to Section 2.07 of the Indenture.



5. OPTIONAL REDEMPTION




     The Company shall not have the option to redeem the Notes prior to July 15, 2011. Thereafter
the Company shall have the option to redeem the Notes in whole, or in part, upon not less than 30
nor more than 60 days’ notice by mail to Holders of the Notes, at 100% of the principal amount of
the Notes together with accrued interest up to, but not including, the redemption date; provided
that if the redemption date falls after an interest payment record date and on or before an
Interest Payment Date, the applicable interest payment shall be payable to the same Person that
will be paid the principal amount of such Note upon redemption.



     No sinking fund is provided for the Notes.



6. NOTICE OF REDEMPTION




     Notice of redemption will be
mailed by first-class mail or in the case of Notes held in book-entry form, by electronic transmission, at least 30 days but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its registered address.
Notes in denominations larger than $1,000 may be redeemed in part, but only in whole integral
multiples of $1,000 or integral multiples of $1.00 in excess thereof. On and after the redemption date, subject to the deposit with the
Paying Agent of funds sufficient to pay the redemption price plus accrued interest, if any, accrued
to, but not including, the redemption date, interest shall cease to accrue on Notes or portions of
them called for redemption.



7. PURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL




     At the option of the Holder and subject to the terms and conditions of the Indenture, the
Company shall become obligated to purchase all or any part specified by the Holder (so long as the
principal amount of such part is $1,000 or an integral multiple of $1.00 in excess thereof) of the Notes
held by such Holder on the date that is 30 Business Days after the occurrence of a Change in
Control, at a purchase price equal to 100% of the principal amount thereof together with accrued



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interest up to, but excluding, the Change in Control Payment Date. The Holder shall have the right
to withdraw any Change in Control Payment Notice (in whole or in a portion thereof that is $1,000
or an integral multiple of $1.00 in excess thereof) at any time prior to the close of business on
the Business Day next preceding the Change in Control Payment Date by delivering a written notice
of withdrawal to the Paying Agent in accordance with the terms of the Indenture.



8. CONVERSION




     A Holder of a Note may convert the principal amount of such Note (or any portion thereof equal
to $1,000 or any integral multiple of $1.00 in excess thereof) into Shares of Common Stock at any time prior
to the last Business Day prior to the close of business on January 15, 2012; provided, however,
that if the Note is called for redemption or subject to purchase upon a Change in Control, the
conversion right will terminate at the close of business on the Business Day immediately preceding
the redemption date or the Change in Control Payment Date, as the case may be, for such Note or
such earlier date as the Holder presents such Note for redemption or purchase (unless the Company
shall default in making the redemption payment or Change in Control Payment, as the case may be,
when due, in which case the conversion right shall terminate at the close of business on the date
such Default is cured and such Note is redeemed or purchased).



     The initial Conversion Price is $3.30 per share, subject to adjustment under certain
circumstances. The number of Shares of Common Stock issuable upon conversion of a Note is
determined by dividing the principal amount of the Note or portion thereof converted by the
Conversion Price in effect on the Conversion Date. No fractional shares will be issued upon
conversion; in lieu thereof, an amount will be paid in cash based upon the Closing Sale Price of
the Shares of Common Stock on the Trading Day immediately prior to the Conversion Date.



     To convert a Note, a Holder must (a) complete and manually sign the conversion notice set
forth below and deliver such notice to a Conversion Agent, (b) surrender the Note to a Conversion
Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or a
Conversion Agent, and (d) pay any transfer or similar tax, if required. Notes so surrendered for
conversion (in whole or in part) during the period from the close of business on any regular record
date to the opening of business on the next succeeding Interest Payment Date (excluding Notes or
portions thereof called for redemption or subject to purchase upon a Change in Control on a
redemption date or Change in Control Payment Date, as the case may be, during the period beginning
at the close of business on a regular record date and ending at the close of business on the next
succeeding Interest Payment Date, or if such Interest Payment Date is not a Business Day, the next
such Business Day) shall also be accompanied by payment in funds acceptable to the Company of an
amount equal to the interest payable on such Interest Payment Date on the principal amount of such
Note then being converted, and such interest shall be payable to such registered Holder
notwithstanding the conversion of such Note, subject to the provisions of this Indenture relating
to the payment of defaulted interest by the Company. If the Company defaults in the payment of
interest payable on such Interest Payment Date, the Company shall promptly repay such funds to such
Holder. A Holder may convert a portion of a Note equal to $1,000 or any integral multiple of $1.00 in excess thereof.



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     A Note in respect of which a Holder had delivered a Change in Control Payment Notice
exercising the option of such Holder to require the Company to purchase such Note may be converted
only if the Change in Control Payment Notice is withdrawn in accordance with the terms of this
Indenture.



9. SUBORDINATION




     The Indebtedness evidenced by the Notes is, to the extent and in the manner provided in the
Indenture, subordinate and junior in right of payment to the prior payment in full in cash of all
Senior Indebtedness. Any Holder by accepting this Note agrees to and shall be bound by such
subordination provisions, authorizes the Trustee to give them effect and appoints the Trustee as
attorney-in-fact for such purpose. In addition to all other rights of Senior Indebtedness described
in the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and entitled to
the benefits of the subordination provisions irrespective of any amendment, modification or waiver
of any terms of any instrument relating to the Senior Indebtedness or any extension or renewal of
the Senior Indebtedness. Such subordination is intended for the benefit of, and may be enforced
by, each Holder of Senior Indebtedness or Designated Senior Indebtedness, as contemplated by the
Indenture.



10. DENOMINATIONS, TRANSFER, EXCHANGE




     The Notes
are in registered form without coupons in minimum denominations of $1,000 and
integral multiples of $1.00 in excess thereof. A Holder may register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes or other governmental charges that may be
imposed in relation thereto by law or permitted by this Indenture.



11. PERSONS DEEMED OWNERS




     The Holder of a Note may be treated as the owner of it for all purposes.



12. UNCLAIMED MONEY




     If money for the payment of principal or interest remains unclaimed for two years, the Trustee
or Paying Agent will pay the money back to the Company at its written request. After that, Holders
entitled to money must look to the Company for payment.



13. AMENDMENT, SUPPLEMENT AND WAIVER




     Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with
the consent of the Holders of at least a majority in aggregate principal amount of the Notes then
outstanding, and an existing Default or Event of Default and its consequences, or compliance with
any provision of the Indenture or the Notes, may be waived in any particular instance with the
consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding.
Without the consent of or notice to any Holder, the Company and the Trustee may amend or supplement
the Indenture or the Notes to, among other



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things, cure any ambiguity, defect or inconsistency or
make any other change that does not, in the good faith opinion of the Board of Directors of the
Company and the Trustee, adversely affect the rights of any Holder in any material respect.



14. SUCCESSOR CORPORATION




     When a successor corporation assumes all the Obligations of its predecessor under the Notes
and the Indenture in accordance with the terms and conditions of the Indenture, the predecessor
corporation will (except in certain circumstances specified in the Indenture) be released from
those Obligations.



15. DEFAULTS AND REMEDIES




     Under the Indenture, an Event of Default includes: (i) the Company fails to pay principal on
any Note when due, whether or not prohibited by the subordination provisions in the Indenture; (ii)
the Company fails to pay any interest on any Note when due if such failure continues for 30 days,
whether or not prohibited by the subordination provisions of the Indenture; (iii) the Company fails
to perform any other agreement required of the Company in the Indenture if such failure continues
for 60 days after notice is given in accordance with the terms of the Indenture; (iv) the Company
fails to pay the purchase price of any Note when due, whether or not prohibited by the
subordination provisions of the Indenture; (v) the Company fails to provide timely notice of a
Change in Control if such failure continues for 30 days after a Change in Control; (vi) any
Indebtedness for money borrowed by the Company or one of the Company’s Significant Subsidiaries
(all or substantially all of the outstanding Voting Stock of which are owned, directly or
indirectly, by the Company) in an aggregate outstanding principal amount in excess of $10.0 million
is not paid at final maturity or upon acceleration and such Indebtedness is not discharged, or such
acceleration is not cured or rescinded, within 30 days after written notice as provided in the
Indenture; and (vii) certain events of bankruptcy, insolvency or reorganization of the Company. If
an Event of Default (other than as a result of certain events of bankruptcy, insolvency or
reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25%
in aggregate principal amount of the then outstanding Notes may declare all the Notes then
outstanding due and payable immediately, all as and to the extent provided in the Indenture. If an
Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization
of the Company, the outstanding Notes shall become due and payable immediately without further
notice, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture
or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to
it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a
majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that withholding notice is
in their interests. The Company is required to file periodic reports with the Trustee as to the
absence of Default.



16. TRUSTEE DEALINGS WITH THE COMPANY




     Wells Fargo Bank, National Association, the Trustee under the Indenture, in its individual or
any other capacity, may make loans to, accept deposits from and perform services



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for the Company or
an Affiliate of the Company, and may otherwise deal with the Company or an Affiliate of the
Company, as if it were not the Trustee.



17. NO RECOURSE AGAINST OTHERS




     A director, officer, employee or shareholder, as such, of the Company shall not have any
liability for any Obligations of the Company under the Notes or the Indenture nor for any claim
based on, in respect of or by reason of such Obligations or their creation. The Holder of the Note
by accepting the Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of this Note.



18. AUTHENTICATION




     This Note shall not be valid until the Trustee or an authenticating agent manually signs the
certificate of authentication on the other side of this Note.



19. ABBREVIATIONS AND DEFINITIONS




     Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors
Act).



     All terms defined in the Indenture and used in this Note but not specifically defined herein
are defined in the Indenture and are used herein as so defined.




20. INDENTURE TO CONTROL; GOVERNING LAW




     IN THE CASE OF ANY CONFLICT BETWEEN THE PROVISIONS OF THIS NOTE AND THE INDENTURE, THE
PROVISIONS OF THE INDENTURE SHALL CONTROL. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.



     The Company will furnish to any Holder, upon written request and without charge, a copy of the
Indenture. Requests may be made to:


Mercer International Inc.

Suite 2840, 650 West Georgia Street

Vancouver, B.C. V6B 4N8

Attention: Chief Financial Officer.




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ASSIGNMENT FORM




To assign this Note, fill in the form below:



	 	 	 	 	 
	I or we assign and transfer this Note to
	 	 	 	 
	 	 	 
	 

	 	 	 	(Insert assignee’s legal name)






 





(Insert assignee’s soc. sec. or tax I.D. no.)




 






 





 





 





 




(Print or type assignee’s name, address and zip code)




and irrevocably appoint



 




agent to transfer this Note on the books of the Company. The agent may substitute another to act
for him or her.











	 	 	 	 	 
	 

	 	 	 	Your Signature:
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	(Sign exactly as your name appears on the face of
this Note)






*Signature guaranteed by:




By: 







 




			
	*	 	The signature must be guaranteed by an institution which is a member of one of the following
recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program
(STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.




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CONVERSION NOTICE



To convert this Note into Shares of Common Stock of the Company, check the box:
   o


To convert only part of this Note, state the principal amount to be converted (must be $1,000 or an
integral multiple of $1.00 in excess thereof): $                    .



If you want the stock certificate made out in another Person’s name, fill in the form below:




 





(Insert assignee’s soc. sec. or tax I.D. no.)




 





 





 





 






 



(Print or type assignee’s name, address and zip code)




	 	 	 	 	 
	 

	 	 	 	Your Signature:
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	(Sign exactly as your name appears on the other side
of this Note)






*Signature guaranteed by:




By: 







 




			
	*	 	The signature must be guaranteed by an institution which is a member of one of the following
recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program
(STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.




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OPTION TO ELECT REPURCHASE UPON A CHANGE IN CONTROL




To:            Mercer International Inc.




     The undersigned registered owner of this Note hereby irrevocably acknowledges receipt of a
notice from Mercer International Inc. (the “Company”) as to the occurrence of a Change in
Control with respect to the Company and requests and instructs the Company to redeem the entire
principal amount of this Note, or the portion thereof (which is $1,000 or an integral multiple
of $1.00 in excess thereof) below designated, in accordance with the terms of the Indenture referred to in this Note
at the Change in Control Payment, together with accrued interest to, but excluding, such date.



	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Signature(s)
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Signature(s) must be guaranteed by a
qualified guarantor institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange
Act of 1934.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Signature Guaranty
	 
	 	 	 	 	 	 
	Principal amount to be redeemed	 	 
	(in an integral multiple of $1,000 or integral multiple
of $1.00 in excess thereof, if less than all):








 




			
	NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the
face of this Note in every particular, without alteration or any change whatsoever.




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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE




     The following exchanges, redemptions, repurchases or conversions of a part of this Global Note
have been made:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Principal Amount
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	of this Global
	 	 	 	 	 	 	 	 	Amount of Decrease	 	Amount of Increase	 	Note Following
	 	 	 	 	Authorized Signatory	 	in Principal Amount	 	in Principal Amount	 	Such Decrease
	Date of Exchange	 	of Custodian	 	of this Global Note	 	of this Global Note	 	(or Increase)






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